Suppliers said that base oil demand had been steady, although not particularly strong, over the past few weeks. “I would not say there was a major uptick, but it’s definitely solid,” a source commented. Given a fairly tight base oil spot supply and demand scenario, spot prices were standing on firm ground or edged up slightly, depending on the grade.

Most API Group I cuts were stable on ongoing buying interest and adequate availability, but spot prices for bright stock have strengthened because of limited domestic supplies and heightened export opportunities. Domestic requirements have also been holding because of demand from the industrial, agricultural and heavy-duty segments.

A similar situation applied to the light viscosity grade in the Group II segment. Supplies of the light and high-viscosity grades have tightened on the back of plant turnarounds and ongoing buying activity, despite a downturn in automotive demand for the Group II and Group III grades. Recent rerefinery shutdowns – including Safety-Kleen and Avista Oil – meant that rerefiners were rebuilding inventories and limiting volumes offered for spot transactions as well.

As mentioned over the past several weeks, a number of base oil units have been scheduled for turnarounds in March and April, which was anticipated to limit Group II spot supplies since producers were likely to prioritize contract commitments. All of the suppliers have assured customers that they have built ample inventories to cover requirements during the outages.

Calumet started a planned shutdown at its Group I and Group II units in Shreveport, Louisiana, in mid-March. Company sources said that the turnaround was going as planned and production should resume this weekend. The shutdown had originally been scheduled for the second half of February, but was later postponed due to severe weather conditions.

Chevron was expected to commence a three-to-four-week turnaround at its Pascagoula, Mississippi, Group II plant in April, but was anticipated to have started building inventories to cover contractual obligations during the outage. Market sources said that the company seemed well-prepared on inventory, and that Chevron’s Richmond plant was also running well after its turnaround last October. There was no producer confirmation about the turnaround since the company does not disclose details about its plant operations.

Ergon announced that its paraffinic refinery in Newell, West Virginia, which houses a Group I and Group II base oils unit, has a scheduled a maintenance event beginning March 31. Various operating units of the refinery will be down for approximately seven weeks as the producer implements several reliability improvements. The company also said that no supply interruptions were expected for Ergon’s current ratable customers.

Further down the road, Excel Paralubes was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of this year, according to market sources.

In terms of Group I production, except for Calumet’s and Ergon’s planned turnarounds, most plants were heard to be running well and have scheduled maintenance later in the year. Even so, a heavy Group I turnaround schedule in other regions such as Asia, together with permanent plant closures have tightened global supplies and fanned interest in U.S. availabilities, lifting export prices to higher levels.

Similarly, spot prices for Group III base oils have also moved up because of tightening supplies as several turnarounds will impact spot availability. Domestic producers have curbed Group III output and have increased Group II production, and import volumes have also declined in recent weeks. Several plants are scheduled for turnarounds over the next couple of months, both in the Americas, as well as in Asia and the Middle East.

In Canada, Petro-Canada plans to embark on a 35-day turnaround at its Group III plant in Mississauga in April. The producer said the shutdown was fully planned for, with contingency inventory built and no impact expected to customers. The Group II unit at the same location will continue to operate.

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 late March or early April.

U.S. suppliers said they had seen an increased number of inquiries from customers and brokers in Mexico. Several Group I and Group II shipments were scheduled to make their way to the neighboring country to meet contract requirements and fill additional orders as blenders seemed eager to rebuild depleted inventories since many had postponed purchases for as long as possible. Perhaps some buyers were also stocking up ahead of potential tariffs on U.S. exports. The U.S. president has postponed the implementation of tariffs on Mexican and Canadian imports to April 2, following discussions with Mexican president Claudia Sheinbaum and Canadian prime minister Justin Trudeau, but if the levies go into effect as planned, Canada and Mexico were expected to retaliate with similar measures that would increase the price of U.S. products.

Meanwhile, U.S. manufacturers who import components and raw materials from China are facing higher costs as the U.S. imposed a 10% tariff on all Chinese imports on March 4 on top of a previous 10% tariff that started on Feb. 4.

On the naphthenics base oils side, prices for the light pale oils were supported by a tight supply and demand ratio. Consumption from the transformer oil sector was drawing large amounts of the light grades against fairly snug supplies given a recent plant turnaround and ongoing demand from other segments as well. Producers were keeping a closer eye on crude oil prices, since sustained higher values may impact naphthenic base oil prices, but sources said there was no major upward pressure yet.

The heavier pale oils were expected to see improved demand from the rubber and tire industry as the summer driving season gets underway, and supplies were deemed balanced-to-tight for the time being. Domestic output seemed sufficient to meet current demand with no shortages noted. It was heard that a European supplier had offered some naphthenic base oil cargoes into the U.S., eliciting muted buying interest.

Crude Oil and Diesel

Crude oil futures traded higher on Wednesday on concerns about tightening global supplies given the threat of U.S. sanctions on Iranian exports and on countries purchasing Venezuelan crude. A larger-than-expected draw in U.S. crude inventories lifted prices as well.

On March 25, West Texas Intermediate May 2025 futures settled on the Nymex at $69 per barrel, compared to $66.90/bbl for front-month futures on March 18.

Brent futures for May 2025 delivery were trading on the ICE at $73.66/bbl on March 25, from $70.53/bbl on March 18.

Louisiana Light Sweet crude wholesale spot prices were hovering at $71.51/bbl on March 24, from $70.34/bbl on March 18, according to the U.S. Energy Information Administration.

Low-sulfur diesel wholesale spot prices were at $2.27 per gallon at New York Harbor, $2.21/gal on the Gulf Coast and $2.31/gal in Los Angeles on March 24, compared to $2.20/gal, $2.13/gal and $2.21/gal, respectively, on March 18, according to the EIA.

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

*ExxonMobil prices obtained indirectly.
**Rerefiner

Posted Paraffinic Base Oil Prices: March 26, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).
Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.
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