To many participants surprise, ExxonMobil was reported to have reduced all of its paraffinic base oil posted prices by 15 cents per gallon, the producers second price markdown in less than a month.
Kleen Performance Products, Petro-Canada, HollyFrontier, Paulsboro, and Phillips 66 also announced price decreases shortly after, while several naphthenic producers stepped out with price cuts as well.
According to sources, ExxonMobil trimmed its API Group I, II and II+ base oils by 15 cents on Dec. 4. This adjustment follows closely a preceding posted price decrease of 25 cents/gal, which went into effect on Nov. 17.
Participants were somewhat surprised about a second price adjustment in such a short time span, but sources commented that the producer was likely preparing for the additional capacity coming on stream at its Rotterdam Group II plant in the Netherlands.
ExxonMobil announced at the ICIS Base Oils and Lubricants conference in New Jersey last week that the Rotterdam expansion was on track to start commercializing Group II base oils in the first quarter of 2019.
HollyFrontier communicated a 15 cent/gal price reduction across all Group I grades, including bright stock, effective Dec. 5.
Along similar lines, Paulsboro will be adjusting its Group I prices down by 15 cents/gal on Dec. 7.
Petro-Canada will be lowering its Group II+ 65N grade by 20 cents/gal, and its Group II+ 100N by 15 cents/gal. The producers Group III cuts will be trimmed by 20 cents/gal, all effective Dec. 5. Petro-Canada will not be revising its Group II prices at this time.
Meanwhile, Phillips 66 announced that prices for its Group II+ and III Ultra-S base oils were lowered by 25 cents/gal on Dec. 1.
Kleen Performance Products communicated that the rerefiner would be moving down its Group II+ grades as of Dec. 5. KPPs Group II+ 120 and 220/240 vis cuts will be adjusted down by 25 cents/gal, resulting in the 120 vis being quoted at $4.01/gal on the West Coast, $3.86/gal in the Midwest, and $3.91/gal in the Northeast. Similarly, the 220/240 vis was adjusted down to $4.21/gal on the West Coast, $4.06/gal in the Midwest, and $4.11 in the Northeast.
Phillips 66 and KPP had not adjusted prices during the first round of cuts in late November/early December like other producers had.
Between mid-November and the first few days of December, a majority of paraffinic producers implemented price decreases in a range of 20 to 25 cents per gallon, depending on the grade and the supplier, on the back of falling raw material values and lengthening supply.
On the naphthenic side, Ergon announced a reduction in pricing of naphthenic oils in the North American market of 20 cents/gal, effective Nov. 30. The decrease applied to all viscosities, a company source confirmed.
Calumet also decreased the price of all of its naphthenic grades by 20 cents per gallon, effective Dec. 4.
San Joaquin Refining notified its customers that its naphthenic oil prices would be reduced by 20 cents/gal on Dec. 6.
Spot prices of paraffinic base oils have also declined, and the decreases were heard to be more significant than those seen on the posted price front. However, participants hoped that a trend reversal on the crude oil and feedstock side would stem further weakening of spot base oil prices.
Additionally, possible cutbacks in refinery production rates over the next few weeks could also offer support to base stock values.
Participants expected crude oil prices to have bottomed out and predicted a possible recovery as Saudi Arabia and Russia may announce crude oil output cuts at the OPEC meeting in Vienna on Dec. 6.
Indeed, crude oil futures moved up for a second day in a row on Tuesday, pushed up by potential OPEC and other crude oil producers output cuts, surprise mandatory production cuts in Canada, and a trade war truce between the United States and China.
At the G20 meeting last week, the U.S. agreed that it will hold off on the scheduled increase in tariffs on Chinese goods from 10 to 25 percent that was set to take effect in January. The two sides now have 90 days to reach an agreement.
On Tuesday, Dec. 4, West Texas Intermediate January futures settled at $53.25 per barrel on the CME/Nymex, up $1.69/bbl from $51.56/bbl on Nov. 27.
Brent futures closed at $62.08/bbl on the CME Tuesday afternoon, and had settled at $60.21/bbl on Nov. 27.
Light Louisiana Sweet crude wholesale spot prices settled at $59.86/bbl on Dec. 3, compared to $58.96/bbl on Nov. 26, according to the U.S. Energy Information Administration.
Low sulfur vacuum gas oil was at Jan WTI plus $15.50/bbl ($67.84/bbl) and high sulfur VGO was at crude plus $15.25/bbl ($67.59/bbl) on Dec. 3. By comparison, low sulfur VGO was hovering at $66.63/bbl and high sulfur VGO at $65.88/bbl on Nov. 26, according to data published by PetroChemWire.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase inExcel format.