U.S. Base Oil Price Report

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Calumet announced a price increase for all its paraffinic base oils on the heels of similar initiatives by other producers put into effect during the previous four weeks.

Calumet communicated that the company would be increasing all of its paraffinic base oils, with the exception of bright stock, by 10 cents per gallon as of Nov. 1.

The recent price hikes, which emerged both on the paraffinic and naphthenic sides of the market, were driven by tight supply on the back of hurricane-related production outages, coupled with steeper crude oil values.

Availability of most base oil grades remained snug, with many producers unable to participate in spot business.

However, given that two large producers, ExxonMobil and Motiva, have been able to restart their facilities in Texas and both were operating at close to full rates, product availability was expected to improve considerably over the coming weeks.

Calumet was also expected to restart its Shreveport, Louisiana, paraffinic base oil plant sometime this week, as maintenance work was anticipated to be completed on schedule, following a planned turnaround which began in mid-October, a company source said. The Shreveport paraffinic plant can produce 4,800 b/d of API Group I, 6,600 b/d of Group II, and 400 b/d of Group III oils, but only production of base stocks 150 vis and heavier were affected by the turnaround.

Higher base oil values have also triggered increases in the finished lubricants segment, with some majors like ExxonMobil and Chevron, and independent suppliers such as Chemlube, Warren Oil, CAM2 and others lifting lube prices (for details, see U.S. Finished Lube Prices Rise in this issue of Lube Report).

Upstream, crude oil futures continued to move up and were hovering at nearly two-year highs on renewed expectations that the OPEC was likely to extend the current production cut deal until the end of 2018. Further support came from supply disruptions in Iraq post-Kurdish referendum, and a larger-than-expected draw in U.S. crude oil inventories, as reported by the American Petroleum Institute for the week ending Oct. 27.

On Tuesday, Oct. 31, West Texas Intermediate futures settled on the CME/Nymex at $54.38 per barrel, up $1.91/bbl from $52.47 per barrel on Oct. 24.

Light Louisiana Sweet wholesale spot prices closed at $60.29 per barrel on Oct. 30, up from $58.36/bbl on Oct. 23, according to data from the U.S. Energy Information Administration.

Brent was trading at $61.37/bbl on the CME on Oct. 31, up $3.04/bbl from $58.33/bbl on Oct. 24.

Low sulfur vacuum gas oil was at Dec WTI plus $13.25/bbl ($67.40/bbl) and high sulfur VGO was at crude plus $11.25/bbl ($65.40/bbl) on Oct. 30. In comparison, low sulfur VGO was hovering at $65.97/bbl and high sulfur VGO at $63.97/bbl on Oct. 24, according to data published by PetroChemWire.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

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