Americas Weekly Base Oil Price Report

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A majority of producers and rerefiners have decreased posted prices, with Safety-Kleen communicating a fresh decrease this week and Petro-Canada announcing additional decreases, following a series of adjustments earlier this month. The decreases were said to have been prompted by sluggish demand, growing supply levels, suppliers’ need to clear inventories, and lower crude oil and feedstock prices.

Petro-Canada announced Group II posting changes that went into effect on November 13. The producer’s Group II 70 neutral and 100N were lowered by 15 cents per gallon, 200N and 300/350N were adjusted down by 40 cents/gal and 600/650N by 30 cents/gal. It previously revised down its Group II+ and Group III posted prices through initiatives that went into effect on November 7.

Safety-Kleen informed its customers it would be reducing posted prices by 15 cents/gal on Group II+ RHT120 and 40 cents/gal on RHT240, effective November 14.

Petro-Canada and Safety-Kleen’s decreases follow those of several other suppliers, including ExxonMobil, Paulsboro, SK Enmove, Motiva, Chevron and Calumet, who had lowered posted prices by 15-50 cents/gal, depending on the grade and the supplier, between October 21 and November 15.

Mounting supplies as a result of U.S. refiners running base oil plants at top operating rates against a slowdown in demand had started to exert downward pressure on prices back in September, when there was a previous round of decreases. Suppliers also resorted to offering temporary value allowances (TVAs) into some accounts to encourage buyers to take more volumes, as producers needed to start clearing inventories ahead of year-end to avoid tax repercussions on existing stocks. Most suppliers and numerous buyers built inventories to avoid potential supply disruptions during hurricane season, which officially ends on November 30, and now see the need to lower these stocks.

Spot prices were also exposed to downward pressure as additional barrels became available, with spot values for most grades slipping by 2-10 cents/gal week on week. While Group I supplies were deemed more balanced than Group II cuts, prices slipped as suppliers tried to compete with Group II availabilities, with the exception perhaps of bright stock.

A turnaround at Chevron’s Group II/III plant in Richmond, California, was due to finish at the end of October and the company was also understood to have scheduled a three-week maintenance program at its Pascagoula, Mississippi, plant in the first quarter of 2025. There was no confirmation about the turnarounds as the producer does not comment on the status of its base oil operations.

Group III grades were also more than sufficient to meet current requirements, and additional volumes were expected to come from Asia and the Middle East over the next couple of months. Domestic producers may be trimming Group III output in the coming weeks though, and this may help reduce the current imbalance.

At the same time, those domestic Group III producers who increased output and will be cutting back production levels may stream more feedstocks toward Group II output, leading to increased availability of Group II grades. Group II 100 neutral was on the tight side so far due to steady demand and production outages in the second half of the year, and this partly explained the more moderate posted price decrease on this cut compared to the other Group II grades. However, a gradual lengthening has started to place pressure on spot prices for this cut.

Export activity remained somewhat thin, as buying appetite from many countries that had been hot spots earlier in the year, including Brazil, has subsided. Even so, there seemed to be an uptick in inquiries from Brazil as U.S. offers were deemed attractive and consumers needed to replenish stocks. There have also been discussions to move Group II base oils to India in December.

U.S. cargoes also continued to make their way to Mexico, but suppliers were also hoping that buyers would increase their purchases over the next few weeks. Participants said that buying interest was likely to pick up if U.S. base oils were offered at agreeable prices as several consumers in Mexico were waiting to stock up. U.S. suppliers typically adjust prices toward the end of the year to entice additional orders and lower their inventories.

Naphthenic

On the naphthenic base oils side, supply and demand were deemed better balanced than on the paraffinic side, and this was lending some support to pricing, although some values were heard to have edged down on falling crude oil and feedstock prices. Some accounts that have contracts linked to a diesel index have seen downward adjustments and some have also received TVAs in recent weeks.

In terms of the lighter grades, suppliers were standing firm by their price indications as they were not under significant inventory pressure. In fact, producers were heard to have turned down some contract opportunities due to expected snug supply positions.

The heavier viscosities may have lengthened as demand from downstream applications in the rubber and tire industries has subsided on seasonal patterns, but some export opportunities may emerge in Asia and Latin America and these may help ease the inventory pressure.

Crude

Crude oil futures continued to be swayed by geopolitical tensions in different parts of the world and worries about oil demand in China, the world’s top crude importer. On Tuesday, crude oil futures were mostly steady after Ukraine launched longer-range missiles into Russia.

U.S. crude futures have flipped to contango for the first time since February, reflecting oversupply conditions that fanned analysts’ concers about the impact of potential Trump tariffs and weaker Chinese demand growth. 

On November 19, WTI January 2025 futures settled on the Nymex at $69.24 per barrel, compared to $68.12/bbl for December 2024 futures on November 12.

Brent futures for January 2025 delivery were trading on the ICE at $73.30/bbl on November 19, from $72.03/bbl on November 12.

Louisiana Light Sweet crude wholesale spot prices were hovering at $71.36/bbl on November 18, according to the Energy Information Administration.

Low sulfur diesel was at $2.24/gal at New York Harbor, $2.17/gal on the Gulf Coast and $2.23/gal in Los Angeles on November 18, according to the EIA. (There was no trading on November 11 due to the Veterans’ Day holiday in the U.S.)

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.

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