Naphthenic base oil suppliers had indicated that were crude oil prices to remain at lower levels for an extended period of time, they would consider price adjustments.

On May 6, Ergon stepped out with a price decrease announcement in North America. The company will be reducing pricing of naphthenic oils by 20 cents per gallon, with an effective date of May 9.

Process Oils, an Ergon company that serves as the exclusive marketer of Cross Oil’s naphthenic oils, announced a 20 cents/gal decrease in naphthenic base oil pricing across the board, effective May 9 as well.

Supply and demand were fairly balanced within the naphthenic market, with the light grades described as tighter than their heavier counterparts on account of healthy demand from the transformer oil segment. While consumption of the heavier grades tends to increase ahead of the summer driving season as these cuts are used in the rubber and tire industry, recent tariff-related disruptions in the automotive sector were thought to have curtailed requirements. Domestic pale oil producers have also been able to achieve more balanced conditions through regular exports to Europe and Asia.

Meanwhile, on the paraffinic side, posted prices were reported as stable. Snug conditions for some grades over the last few weeks have partly offset pressure from lower crude oil and feedstock values. Refiners’ margins had eroded at the end of 2024 and beginning of 2025, but stronger demand in March and falling crude oil and vacuum gasoil prices have led to a slight improvement, which producers hoped to maintain by keeping base oil prices largely unchanged.

Availability of most paraffinic grades was deemed adequate-to-plentiful to meet current demand, with some cuts experiencing tight conditions over the last two months because of a busy turnaround schedule against a steady stream of requirements.

However, the completion of maintenance programs was expected to allow for more product to be reintroduced into the supply stream.

Group I

As observed since the beginning of the year, fundamentals in the Group I category remained fairly snug, with the SN500 grades and bright stock showing strained conditions and firm prices on reduced output in most regions, including in the U.S. as a refiner was completing maintenance work. Some suppliers noted that domestic demand had weakened because of a general slowdown in the industrial segment, particularly for metalworking fluids. This was attributed to current trade uncertainties affecting the manufacturing sector.

Tight Group I supplies persisted in Europe and Asia following permanent plant closures in recent years and ongoing turnarounds at a number of plants. This situation had triggered inquiries for U.S. Group I supplies for export, but given plant maintenance at domestic plants and ongoing contractual demand, spot availability for export transactions was limited, placing upward pressure on pricing, namely that of bright stock. Still, at least one supplier had available Group I light-viscosity grades and heavy-grades that it hoped to place into the export market, although cargoes were not large and they were expected to move to Europe or Africa.

Buying appetite from Brazil was fairly muted as consumers were working down inventories, although some have started to look for import opportunities, mainly because there were expectations that some grades would be in tight supply and the domestic producer has increased pricing. Brazilian lubricant manufacturer Moove, whose plant was damaged by a fire back in February and has not yet restarted operations, was heard to be importing lubricants from Europe, the U.S. and neighboring countries to supply existing customers and protect its market share.

Group II

Supply in the Group II segment was expected to improve as plants resume production following maintenance programs.

Most Group II grades were snug in the U.S. because of reduced production levels given recent and ongoing plant turnarounds. The light grade 100N was described as balanced-to-tight, while the mid-viscosity 220N grade showed some length, despite a turnaround at a Group II producer’s 220N unit. Rerefined 100N has also tightened, helping support current pricing. The 600N appeared to be well-balanced against current requirement levels, with no extra barrels for export, but no shortage to cause concern, sources said.

The restart of Chevron’s Pascagoula, Mississippi, plant and of other producers’ units over the next few weeks was expected to relieve some of the supply constraints.

Chevron has completed a one-month turnaround and catalyst change at its Pascagoula, Mississippi, Group II plant that started in early April. Market sources had commented that the company had been well-prepared on inventory, and that it was likely to see a 10% yield increase with the new catalyst. Chevron’s Richmond plant was also running well after its turnaround last October. There was no producer confirmation about the turnaround schedule since the company does not disclose details about its plant operations.

Ergon shut down its Group I/Group II base oil unit in Newell, West Virginia, for about seven weeks on March 31 as the producer is implementing several reliability improvements. The unit was expected to be restarted this week, and no supply interruptions were expected for current ratable customers as the company had built inventories ahead of the shutdown.

Motiva will be performing maintenance on the hydrocracker that produces the Group II 220N grade. The three-week program was pushed back by a couple of weeks as the catalyst delivery was delayed, according to market sources.

Excel Paralubes was also heard to be preparing inventories as it was expected to embark on a turnaround at its Group II plant in Lake Charles, Louisiana, in the second half of the year. The plant has been running at reduced rates due to technical issues related to Group III production at the facility, according to market sources, but contractual obligations continued to be met.

There were also reports that Group I/Group II producer Calumet was rebuilding stocks following a turnaround at its Shreveport, Louisiana, plant in March.

In Mexico, demand for U.S. Group I and Group II base oils was heard to have weakened due to economic uncertainties and trade turmoil. There were also fewer concerns about tariffs on base oil imports as it appeared that base oils might be exempt under the United States-Mexico-Canada Agreement (or USMCA). At the same time, difficulties in extending or renewing import licenses for U.S. base oils were expected to thwart the conclusion of some transactions.

There was very limited talk about Group II exports to India. While availability of the 220N grade was expected to lengthen in the U.S., following turnarounds, there were no extra volumes available for shipment to India at competitive prices as had been the case in late 2024.

Group III

Downward price pressure was building on Group III base oils as demand from the automotive industry for factory-fill oils has slipped on the heels of tariff-related production disruptions. A Canadian base oil plant was expected to resume operations, bringing more product into the market as well.

Nevertheless, some price support came from decreased Group III production at U.S. facilities in favor of increased Group II output, and more limited import volumes in the previous months.

Concerns about tariffs on imported base oils seemed to be partly assuaged by reports that South Korean imports would not be subject to tariffs as base oils fall in the energy commodities category, which are exempt. Similarly, Canadian base oils can enter the U.S. without tariffs as long as the products are USMCA compliant, market sources said. Tariff regulations pertaining Middle East imports have not been finalized, but for now, there were expectations that energy products from all countries would be exempt.

A packed turnaround schedule in the Americas, Asia and the Middle East has curtailed Group III availability, with some plants expected to start maintenance after building inventories, and others resuming production at the end of April/early May.

In Canada, Petro-Canada has just completed a 35-day maintenance program at its Group III plant in Mississauga, which started in early April and went according to plan. The unit was expected to be restarted last week. The shutdown had been fully planned for, with the company having built contingency inventory to avoid any supply impact to customers. The Group II unit at the same location continued to operate during the Group III turnaround.

In South Korea, SK Enmove will be completing a partial turnaround at its Group III plant in Ulsan for two months, starting this month, 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, ADNOC was expected to shut down its Group II/Group III plant in Ruwais, Abu Dhabi, United Arab Emirates, for two to three weeks in late April or early May.

Bapco was heard to have scheduled a 45-day turnaround at its Group III facilities in Sitra, Bahrain, which was originally scheduled to start in late March or early April, but was reportedly postponed.

Downstream, lubricant and finished products manufacturers were facing price pressure because of tariffs on certain raw materials and the climbing cost of some inputs, particularly additives, which were expected to be increased this month. At the same time, competition among suppliers was thwarting efforts to improve margins. Blenders were expected to resist the additive increases and a number of them might reduce production if needed, as lubricant inventories were sufficient to meet demand for the time being.

Crude Oil and Diesel

Crude oil futures fell on Monday after the OPEC+ agreed to increase production by 411,000 barrels per day in June. Oil prices were mostly down in April – posting the biggest monthly loss since 2021 – and the downtrend was attributed to fears of a global economic slowdown that would dampen oil demand at the same time that OPEC+ planned to increase output.

However, on Wednesday, investors welcomed news of U.S.-China tariff negotiations that will take place in Switzerland on May 9-12, with Brent and West Texas Intermediate posting gains of 1.2% and 1.5%, respectively.

Additionally, even though OPEC+’s move to increase output triggered oversupply worries, they were somewhat tempered by U.S. energy companies stopping production at a number of rigs, potentially stabilizing prices by limiting output, according to media reports. Data from the American Petroleum Institute showing a larger-than-expected drop in U.S. crude inventories indicated strong demand and assuaged some of the oversupply concerns as well.

On May 6, West Texas Intermediate June 2025 futures settled on the Nymex at $59.09 per barrel, compared to $60.42/bbl on April 29. For reference, on April 1, WTI futures had settled at $71.20/bbl.

Brent futures for July 2025 delivery were trading on the ICE at $62.42/bbl on May 6, from $63.66/bbl for June futures on April 29. They were down from $74.42/bbl on April 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $60.56/bbl on April 28, compared to $65.05/bbl on April 28 and $74.37/bbl on March 31, according to the U.S. Energy Information Administration.

Low-sulfur diesel wholesale spot prices were at $1.98 per gallon at New York Harbor, $1.93/gal on the Gulf Coast and $1.95/gal in Los Angeles on May 5, compared with $2.17/gal, $2.14/gal and $2.20/gal, respectively, on April 28, according to the EIA.

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

Posted Paraffinic Base Oil Prices May 7, 2025
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).
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*ExxonMobil prices obtained indirectly.
**Rerefiner