U.S. Base Oil Price Report


Motiva and Chevron ended a summer spell of steady postings by announcing price reductions this week, while on the naphthenics side, Cross Oil announced a price increase.

This appears to be one of those rare occasions when price adjustments on the paraffinic and naphthenic fronts are moving in opposite directions.

Motiva led the paraffinic movement with a reduction heard to have been prompted by seasonally soft demand and competitive spot pricing. The producer reduced the posted price of its API Group II Star 4 and Star 12 base oils (105 and 600 Saybolt Universal Seconds or SUS) by 20 cents per gallon on Aug. 6, while its Star 6 cut (220 SUS) fell by 15 cents/gal. Both of Motivas Group III grades were also lowered by 20 cents/gal.

These adjustments widen the delta already existing between Motivas posted prices and other Group II producers.

Shortly after Motivas overture, Chevron communicated to its customers that it will lower its Group II 220R grade by 10 cents/gal and its 600R base oil by 20 cents/gal, effective Aug. 15, to reflect current market supply-demand conditions. The posted price of the producers 100R cut will remain unchanged. Chevrons postings will be adjusted on the accompanying price table next week when these changes go into effect.

Some producers said Motivas markdowns came in the face of rising feedstock and transportation costs that have squeezed margins over the past several weeks. The higher feedstock costs are placing more pressure on margins, a producer emphasized.

These same cost factors are actually the main drivers for an increase that Cross Oil will be impose on all of its naphthenic oils as of Aug. 17. The companys light grades through 750 SUS will be going up by 20 cents/gal, and all grades above 750 SUS will see increases of 15 cents/gal.

Some other naphthenic producers have also moved prices in recent weeks but have not made any official announcements, sources said.

While crude oil has come off of May highs, West Texas Intermediate values continued to teeter near $69 per barrel, while vacuum gas oil was also hovering at soaring levels near $1.95/gal, sources noted.

Crude oil prices climbed on Tuesday, with futures trading near their highest level in about five weeks as reinstated sanctions on Iran were expected to limit global supply, and Saudi Arabias production has also contracted.

President Donald Trump signed an executive order on Monday restoring sanctions on Iran that will prohibit the sale of United States dollars to the Iranian government and outlaw the purchase of its sovereign debt, among other measures. Partial sanctions came into effect early Tuesday, with more severe sanctions set for the next 90 days. The sanctions will remain in effect, unless Iran ceases its support for militant groups in the Middle East and ends its uranium enrichment program, MarketWatch reported.

Market participants estimated that the sanctions, in full force, could block more than 1 million barrels per day of Irans roughly 2.5 million b/d of crude exports, but analysts said the impact on the market could be muted as other producers could fill the gap.

On Tuesday West Texas Intermediate futures settled at $69.17 per barrel on the CME/Nymex, up 41 cents/bbl from $68.76/bbl on July 31.

Light Louisiana Sweet crude wholesale spot prices settled at $72.14 per barrel on Monday, compared to $71.59/bbl on Friday, according to the U.S. Energy Information Administration.

Brent was trading at $74.65/bbl on the CME Tuesday, up 40 cents/bbl from $74.25/bbl on July 31.

Low-sulfur vacuum gas oil traded at September WTI crude plus $13/bbl ($82.01/bbl), and high-sulfur at crude plus $12.25/bbl ($81.26/bbl) on Aug. 6. By comparison, low-sulfur VGO was hovering at $82.38/bbl and high-sulfur VGO at $80.38/bbl on July 30, 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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