U.S. Base Oil Price Report


A majority of paraffinic and naphthenic base oil producers initiated price increases, with Calumet, HollyFrontier, Paulsboro, PetroCanada and Avista joining the group of suppliers who communicated mark-ups over the past two weeks, while a couple of Group II+/III suppliers abstained from revising their postings.

Calumet announced that the company was raising paraffinic prices by 15 cents per gallon on all API Group I and II grades, effective Jan. 19. Bright stock is the only exception and will not move, a company source noted.

Likewise, HollyFrontier will be lifting its Group I postings by 15 cents/gal on Jan. 26, with the exception of bright stock, which will remain intact.

Along similar lines as other Group I suppliers, Paulsboro will be increasing its Group I base oils by 15 cents/gal as of Jan. 31.

HollyFrontiers and Paulsboros adjustments will not be reflected in the Price Table below until the week of their implementation.

PetroCanada will move up the price of its Group II 70N, 200N, 350N and 600N by 13 cents/gal, while its 100N grade will increase 16 cents/gal. The companys Group II+ 100N grade will be lifted 22 cents/gal, with all of the adjustments becoming effective Jan. 16.

Avista Oil will be adjusting its Group II grade up by 13 cents/gal on Jan. 15, while leaving the price of its Group III base oil unchanged.

SK and Phillips 66 did not adjust their Group II+/III base oils.

In the naphthenic camp, Ergon, Calumet, San Joaquin Refining and Cross have communicated price increases of 20 cents/gal across the board, with implementation dates during Jan. 12-18.

The higher base oil prices were fueled by the unabated climb in crude oil and feedstock prices, and a balanced-to-tight supply ratio.

Most base oil producers explained that they had finished the year with lower inventories than in the past, and that demand had remained fairly steady into the first couple of weeks of 2018.

However, the Martin Luther King Jr. holiday on Monday and the implementation of the fresh price hikes had a bit of a slowing effect on requirements this week, sources said.

The base oil increases also triggered hikes on the finished lubricants side of the business (for further details, see Shell to Raise Finished Lube Prices in this issue of Lube Report Americas).

A softer demand scenario was seen in Brazil, where finished lubricant requirements continue to be seasonally weak, mirroring conditions in many other key global markets, Claudio Pereira da Silva, director of LubeKem Consulting, observed. But prospects for demand growth in 2018 were rather positive, he added.

Prices of finished lubricants in Brazil were stable to flat. In terms of base oils, local producer Petrobras was heard to have dropped local prices for January on most of its Group I grades between 2 to 2.5 percent compared to December 2017. Group II and III products sold by large wholesale distributors are holding stable to flat.

On the other hand, Petrobras increased its January price for pale oils between 1 and 2 percent compared to Dec. 2017, according to sources.

Prices for February are under discussion, and there appears to be upward pressure on both base oil import offers (from traders) and local prices from Petrobras, wholesale distributors and rerefiners, and also on finished lubes due to higher crude oil and raw material costs, sources said.

Upstream, crude oil futures retreated somewhat on Tuesday, falling nearly $1 per barrel, but healthy demand continued to support prices at levels not seen since 2014.

Prices have been propped up by oil production curbs in OPEC nations and Russia, as well as growing demand. The production cuts are expected to last through 2018.

On Tuesday, Jan. 16, West Texas Intermediate futures closed on the CME/Nymex at $63.73 per barrel, up 77 cents per barrel from $62.96/bbl on Jan. 9.

Light Louisiana Sweet wholesale spot prices settled at $68.87 per barrel on Jan. 12 (there was no trading on Jan. 15 due to the Martin Luther King Jr. holiday), compared to $66.43 on Jan. 8, according to the U.S. Energy Information Administration.

Brent was trading at $69.15/bbl on the CME on Jan. 16, up 33 cents/bbl from $68.82/bbl on Jan. 9.

Low sulfur vacuum gas oil was at Feb WTI plus $15.50/bbl ($79.30/bbl) and high sulfur VGO was at crude plus $14.25/bbl ($78.05/bbl) on Jan 11. In comparison, low sulfur VGO was hovering at $77.01/bbl and high sulfur VGO at $75.26/bbl on Jan. 4.

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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