At the same time, lubricant manufacturers have faced strong resistance to attempts of price increases on finished products, even though margins have been pressured for several months. This issue has particularly come to the forefront in recent weeks as a number of base oil producers announced posted price increases in early February.

Soaring crude oil prices earlier in the year had fueled a round of posted price increases for all API Group I base oils and some Group II and Group II+ cuts between Feb. 1-7. However, crude oil prices have slumped from those earlier levels, with West Texas Intermediate futures currently trading close to $69 per barrel compared to around $77/bbl in mid January. 

Group I grades were still described as snug and the strained conditions continued to provide support to current price levels, although it was heard that some buyers were resisting the recent posted price increases. The heavy grades have seen the most tightening, and bright stock, in particular, commanded robust demand amid limited availability in most regions, partly driven by the Group I plant rationalizations that have taken place in recent years. This situation offered support to firm offers from a majority of suppliers, not only in the U.S., but also in Europe and Asia. “We are seeing good demand in domestic and international markets. Bright stock inquiries globally have picked up the past couple weeks,” a supplier emphasized. 

Group II availability was slightly more abundant, and prices were generally stable, although there were isolated reports of buyers requesting temporary value allowances (TVAs) as feedstock levels have come down and downstream demand was still lackluster. While a couple of suppliers acknowledged comfortable inventory levels for the light grades, others reported balanced positions against steady requirements, noting that the high-viscosity grades were the least available cuts at the moment.

Most producers were operating plants at top rates as base oil margins were still advantageous compared to competing fuels. However, spot supplies may experience some tightening in the coming weeks on the back of at least two planned turnarounds.

Calumet will be shutting down its Group I and Group II units in Shreveport, Louisiana, for two weeks in the second half of March, although the producer had originally scheduled the turnaround for the second half of February. The decision to delay the turnaround was due to  work overload in recent weeks as crews had to prepare the units for the freezing conditions that affected many parts of the South, and it was generally deemed advisable to wait for warmer weather. The producer has assured customers that it will have built ample inventory to cover contract demand during maintenance.

Chevron was expected to commence a three-to-four week turnaround at its Pascagoula, Mississippi, Group II plant in March, but was anticipated to have started building inventories to cover contractual obligations during the outage. However, there may be less availability of spot supplies, according to sources. The producer does not disclose details about its plant operations.

Group III prices were generally stable, supported by a tighter supply and demand ratio in the U.S. as a result of lower imported volumes moving to the U.S. since the beginning of the year and reduced Group III production from domestic refiners. Potential tariffs on Canadian imports could have a direct impact on Group III products moving from that country into the U.S. Upcoming plant turnarounds in the Middle East and Asia might further strain spot availability from those regions, offering further support to pricing.

In South Korea, SK Enmove will be completing a partial turnaround at its Group III plant in Ulsan for two months, starting in May, but the shutdown was not expected to have a significant impact on supplies because of uninterrupted production on the facility’s other trains, company sources said.

In the Middle East, Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, starting in March.

Base stock suppliers were holding on to hopes that consumption would improve in March as lubricant manufacturers prepare inventories for the spring production cycle and were therefore reluctant to adjust prices. Some suppliers experienced misgivings as domestic spring demand had been disappointing the previous two years, while others were eyeing export opportunities to keep inventories in balance.

Export activity has been partly affected by the latest trade disputes, although some sellers said that Mexican buying interest had not slowed down and described it as “business-as-usual.” Others noted that Mexican buyers had placed additional orders ahead of the potential implementation of tariffs next week. Trump has mentioned possible 25% levies on Canadian and Mexican imports and there were concerns these countries’ governments would retaliate with commensurate tariffs on U.S. goods. Participants said it was too early to quantify the exact impact that a tariff war between the U.S. and Mexico would have on base oil shipments.

Brazilian buyers have also made inquiries for U.S. cargoes, but more attractive domestic pricing have thwarted some of the proposed transactions. Bright stock prices have edged up, reflecting conditions seen in other regions as well. Base oil and lubricant demand should pick up in Brazil after the Carnival holidays in late Feb./early March, particularly from the agricultural segment at the start of the soybean harvest season and the planting of winter grain crops in Southern Brazil. There have also been discussions to move base oils from Asia, with an 8,000-metric-ton cargo mentioned for shipment from Kerteh, Malaysia, to Rio de Janeiro in the second half of February.

A fire and production disruption at Moove’s lubricant plant near Rio de Janeiro, Brazil, earlier this month was expected to create some lubricant shortages, but other lubricant suppliers in the country were anticipated to meet the unfulfilled requirements. These suppliers were expected to require additional base oils, offsetting some of the reduced demand from Moove, which is the second largest lubricant supplier in the country.

On the naphthenics base oils side, prices were largely reported as stable, although there has been downward pressure on pricing from lower crude oil values. A tightening supply and demand scenario was partly offsetting this pressure. The approach of the spring season and an expected pick-up in the construction segment was starting to draw attention on the light pale oils. Some segments of the naphthenic base oils, particularly the heavy grades, were competing with paraffinic cuts.

Naphthenic base oil producer San Joaquin Refining was expected to complete a scheduled annual maintenance program at its naphthenic base oil plant in Bakersfield, California, in late Feb. The program started on Jan. 31 and was likely to last up to three weeks. The producer was anticipated to continue meeting contractual obligations during the shutdown as it has built inventories for that purpose, but will not be offering spot supplies until it is able to rebuild stocks, according to sources.

Also this year, both of Ergon’s refineries – Ergon Refining Inc. in Vicksburg, Mississippi, which houses a naphthenic base oils plant, and Ergon West Virginia Inc. in Newell, West Virginia, with a Group I and Group II base oil unit, will undergo major turnarounds, according to company sources. Further details were not forthcoming by the publishing deadline.

Crude and Diesel Prices

Crude oil futures fell to a two-month low on Tuesday on news of weaker U.S. consumer confidence and a shrinking German economy in Q4 2024. Signs that Nigeria would be increasing crude output also weighed on prices. However, prices edged up on Wednesday on reports from the U.S. Energy Information Administration that U.S. stockpiles had fallen the week ending Feb. 21.

On Feb. 25, West Texas Intermediate April 2025 futures settled on the Nymex at $68.93 per barrel, compared to $71.85/bbl for March futures on Feb. 18.

Brent futures for April 2025 delivery were trading on the ICE at $73.26/bbl on Feb. 25, from $76.37/bbl on Feb. 18.

Louisiana Light Sweet crude wholesale spot prices were hovering at $74.06/bbl on Feb. 24, from $74.25/bbl on Feb. 14, according to the U.S. EIA. (There was no trading on Feb. 17 due to Presidents Day in the U.S.)

Low-sulfur diesel wholesale spot prices were at $2.46/gal at New York Harbor, $2.34/gal on the Gulf Coast and $2.50/gal in Los Angeles on Feb. 24, compared to $2.49/gal, $2.36/gal and $2.51/gal, respectively, on Feb. 14, according to the EIA.

*ExxonMobil prices obtained indirectly
**Rerefiner

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

Posted Paraffinic Base Oil Prices: February 26, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton)
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