U.S. Base Oil Price Report


Phillips 66 and Petro-Canada announced increases for their API Group II+/III base oils, after earlier adjustments to their Group II postings. With crude oil prices reaching three-year highs, U.S. suppliers felt justified in having increased prices this month, as production costs continue to rise.

Phillips 66 will be lifting its Group II+ base oils by 18 cents per gallon, and its Group III cuts by 15 cents/gal as of May 23.

On May 3, Excel Paralubes had increased the Phillips 66 postings of Group II oils. The suppliers Group II 70N and 80N cuts had moved up by 19 cents/gal; its 110N grade by 21 cents/gal, its 225N oil by 20 cents/gal, and its 600N cut by 10 cents/gal at that time.

Petro-Canada communicated that it was raising the posted price of all its Group II+/III grades by 15 cents per gallon, effective May 24.

The producer had previously increased its Group II 70N to 200N postings by 20 cents/gal, and its 350N and 650N grades by 15 cents/gal on May 2.

The balance of paraffinic and naphthenic base oil suppliers have implemented price increases during the month of May as well, ranging 10 to 20 cents/gal in the case of the paraffinic cuts, and 20 cents/gal for the pale oils.

Downstream lubricant manufacturers commented that the higher raw material costs were difficult to absorb, and hikes were hard to achieve on their own products as a majority of lube and additive suppliers have implemented two rounds of increases since the beginning of the year, and expected resistance to further adjustments.

The current supply of Group I oils continued to be described as snug, with a few spot requirements going unfulfilled as producers focused on meeting contractual obligations. A supplier mentioned receiving some inquiries for small parcels of bright stock, and some of the other Group I cuts were moving quite briskly, too.

In Mexico, buying interest for Group I spot cargoes remains healthy, but U.S. suppliers do not have much additional material to offer, and some are only able to cover partial requirements, especially for bright stock.

Fluctuations in the exchange rate of the dollar versus the local currency, the Mexican peso, is also hurting buyers, a supplier noted, although not all Mexican buyers are tied to the peso, as some buy and sell in dollars, another player pointed out.

A second Group I producer was heard to be readying a large cargo for export, possibly to Europe or Nigeria, but this could not be confirmed. Group I availability in Europe was heard to be very tight and prices have been steadily moving up, sources added.

The Group II segment appeared to be more balanced, although the heavy-viscosity grades were heard to be more plentiful than their light-vis counterparts, and this was spurring more attractive offers on spot transactions. However, sources mentioned that the discounts only seemed to apply to rather large export cargoes.

Group III buyers were facing no difficulties in obtaining product, following a spurt of tight supplies, and there were rumblings that competition between well-established suppliers and Middle East producers had intensified.

Upstream, crude futures surged after the United States Secretary of State Mike Pompeo outlined demands that Iran would have to meet before U.S. officials agree to a new nuclear deal with that nation. President Donald Trump said the U.S. would impose the strongest sanctions in history unless Iran complies with his countrys requirements.

Predictions about steady global crude oil demand against an ongoing output curb by OPEC members offered additional support, analysts said.

West Texas Intermediate futures settled at $72.13 per barrel on the CME/Nymex on Tuesday, May 22, up 82 cents/bbl from $71.31/bbl on May 15.

Light Louisiana Sweet crude wholesale spot prices settled at $78.06 per barrel on May 21, compared to $75.16/bbl on May 14, according to the U.S. Energy Information Administration.

Brent settled at $79.57/bbl on the CME on May 22, up $1.11/bbl from $78.46/bbl on May 15.

Low sulfur vacuum gas oil was at June WTI crude plus $10/bbl ($82.24/bbl) and high sulfur VGO was at crude plus $9/bbl ($81.24/bbl) on May 21. By comparison, low sulfur VGO was hovering at $81.46/bbl and high sulfur VGO at $80.96/bbl on May 14, 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.

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