Earlier this week, Excel Paralubes lowered the posted price of its API Group II 70N and 110N grades by 15 cents per gallon, its 220N by 40 cents/gal and its 600N by 35 cents/gal, effective Nov. 25.

Avista Refining and Trading announced a 15 cents/gal price decrease on its Group II+ grade and 10 cents/gal on its Group III base oil, with an effective date of November 25 as well.

Driven by similar market fundamentals, a majority of producers and rerefiners had lowered posted prices by 15-50 cents/gal, depending on grade and supplier, between Oct. 21 and Nov. 15.

Suppliers had been more hesitant to adjust Group II prices given that the supply and demand balance had tilted to the tight side in the U.S. since September, but any production disruptions that may have contributed to the tightening have been resolved, and most refiners were heard to be running plants at close to top rates. This situation, coupled with a demand slowdown in the domestic market and the need to clear inventories held during the hurricane season and ahead of year-end tax valuations, prompted suppliers to adjust down Group II prices as well. The only Group II grade that was not revised down during the latest round of decreases was ExxonMobil’s 220N. Similarly, Group I producers have not decreased bright stock given strained availability of this difficult-to-substitute grade.

Looking ahead into 2025, there may be a tightening of Group II supplies as Chevron has scheduled a three-week turnaround at its Group II plant in Pascagoula, Mississippi, in the first quarter. There was no confirmation about the turnaround as the producer does not comment on the status of its base oil operations.

The Group III cuts remained exposed to downward pressure given ample domestic supplies and the expected arrival of South Korean and Middle Eastern cargoes over the next few weeks. The 4 cSt grade continued to be the most abundant, and prices of this base oil have therefore lost more ground compared to the other Group III cuts.

The posted price decreases did not come as a surprise as values tend to come under pressure in the fourth quarter because the peak driving season has come to an end, consumption levels begin to sag, and stocks built to cover potential weather-related supply disruptions start to be released.

The base oil decreases were welcome news for lubricant and finished products manufacturers, as they continued to feel pressure from steep production and raw material costs, and were also dealing with competitive situations that required them to adjust product prices down to retain specific accounts. Some additive decreases were also heard to have been implemented, offering additional relief to blenders.

Increasing base oil supplies have placed downward pressure on spot prices since September, but values remained fairly steady this week, perhaps because of muted spot discussions and subdued export activity. Suppliers were also reluctant to trim prices further as the decreases did not seem to spur additional demand.

Exports had been quite brisk earlier in the year, but trading has diminished, with buying appetite from several countries such as Brazil having subsided. A few inquiries from Brazilian buyers were reported over the last couple of weeks since U.S. prices have softened, and consumers were hoping to conclude deals at advantageous levels to replenish stocks, but U.S. suppliers were also facing competition from domestic producers.

Discussions to move Group II base oils to India in December have also emerged. Some cargoes were also discussed for shipment to Europe and Africa, with a 3,500-metric-ton parcel mentioned for possible loading on the U.S. Gulf Coast to Egypt in late November. In terms of shipments to the U.S., a 2,000-ton cargo was expected to be shipped from Rotterdam to Charleston, South Carolina, between Nov. 25 and Dec. 5.

There was also buying interest from Mexico, with a number of U.S. Group I and Group II suppliers reducing prices to attract additional orders and bring down their inventories. The typical increase in purchases of light grades for diesel blending in Mexico has been largely absent this year given government restrictions on base oil imports for this purpose. Nevertheless, there were expectations that some negotiations would take place next week on the sidelines of the ICIS Pan American Base Oils and Lubricants conference in New Jersey.

Naphthenic

In the naphthenic base oils camp, activity was understandably subdued this week due to the upcoming holiday on Thursday, but the market was described as fairly balanced. This factor allowed suppliers to maintain pricing despite fluctuations on the crude oil side, although a number of customers that have contracts linked to a diesel index have seen downward adjustments, and other accounts have also received some discounts in recent weeks.

The lighter grades continued to enjoy steady demand, particularly from the transformer oil sector and from applications linked to infrastructure projects, which have seen a boost over the last couple of years. Suppliers were not likely to adjust prices as they were not under significant inventory pressure. Furthermore, a couple of suppliers were heard to have turned down contract opportunities due to expected snug supply positions in the first quarter.

The heavy viscosity pale oils have become more readily available as demand from downstream applications in the rubber and tire industries has subsided on a seasonal slowdown, but export business into Asia and Latin America was helping offset any product build-up.

Crude

Crude oil futures remained volatile because they were impacted by a potential peace deal between Israel and Hezbollah – even as Israel ramped up its air strikes in Lebanon on Tuesday – and the possibility that OPEC+ would delay a planned output hike at the organization’s meeting on December 1 given a slowdown in global oil demand.

On Tuesday, crude oil futures moved higher as traders anticipated the potential impact of U.S. president-elect Donald Trump’s planned trade tariffs on Mexico and Canada. Oil refiners have warned that Trump’s expected 25-percent tariff on Canadian oil imports would push up gasoline prices for U.S. drivers.

On Nov. 26, WTI January 2025 futures settled on the Nymex at $68.77 per barrel, compared to $69.24/bbl on Nov. 19.

Brent futures for January 2025 delivery were trading on the ICE at $72.81/bbl on Nov. 26, from $73.30/bbl on Nov. 19.

Louisiana Light Sweet crude wholesale spot prices were hovering at $71.91/bbl on Nov. 25, from $71.36/bbl on Nov. 18, according to the Energy Information Administration.

Low-sulfur diesel was at $2.23/gal at New York Harbor, $2.17/gal on the Gulf Coast and $2.32/gal in Los Angeles on Nov. 25, compared to $2.24/gal, $2.17/gal and $2.23/gal, respectively, on Nov. 18, according to the EIA.

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.