U.S. Base Oil Price Report


(Feb. 21, 2018; 1:45 p.m. EST. This article has been updated to include information about price increases by Phillips 66.)

A majority of paraffinic base oil producers have implemented price increases over the last three weeks, with most postings moving up by 15 to 22 cents per gallon, depending on grade and the supplier. Market discussions were fairly subdued this week as many participants were attending the ICIS World Base Oils and Lubricants Conference in London.

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One of the price initiatives that will be going into effect this week is Paulsboro Refinings, as the producer will be lifting its API Group I light and mid-vis base oils by 20 cents/gal and its VP 500, 700 and bright stock by 15 cents/gal on Feb. 21.

Other Group I producers, including ExxonMobil, Calumet, and HollyFrontier, have already raised postings by 15 and 20 cents/gal, as of Feb. 16.

Another price adjustment that became effective this week was Phillips 66s increase on Group II+ and III base oils. The producer lifted its Ultra-S 2, 3, 4 and 8 grades by 20 cents/gal on Feb. 20.

Kleen Performance and ExxonMobil were also heard to have lifted their Group II+ grades by 20 cents/gal on Feb. 6 and Feb. 16, respectively, while Motiva raised its Group III prices by 20 cents/gal during this round.

Within the Group II segment, Chevron initiated the latest round of price hikes, raising its 100R and 220R base oils by 20 cents per gallon and its 600R grade by 15 cents/gal on Jan. 31. The remainder of the Group II suppliers, including Excel Paralubes (the Phillips 66/Flint Hills Resources joint venture), Petro-Canada, Avista Oil, Kleen Performance Products, Calumet, ExxonMobil, and Motiva lifted their base oils postings by 15 to 22 cents/gal between Feb. 2 and Feb. 16.

The markups were fueled by a snug supply/demand scenario, firm crude oil and feedstock values, and escalating transportation and labor costs, according to supplier sources.

There were fewer spot volumes available in the Group I segment as demand has been robust and HollyFrontier took its 9,500 barrels per day Group I plant in Tulsa, Oklahoma, down for a turnaround over the weekend. The plant was expected to be off-line for slightly over a month. The producer built inventories to cover requirements during the shutdown and did not anticipate any supply disruptions, but sources said there were generally fewer spot cargoes offered in the market.

The Group II sector was also heard to be snug, and export inquiries for both Group I and II cargoes continued to be noted, particularly from Mexico as the local Group I plant was understood to be down. Mexican buyers were also heard to be looking for imports from other origins, sources said.

While domestic demand has been spotty for some grades and strong for others as it normally is in early spring, requirements in general were not expected to pick up in earnest until March, and April will tell us what volumes really look like, sources added.

There were also reports that Petro-Canada had shut down its plant in Mississauga, Canada, for a turnaround that will last around 40 days. The unit can produce 11,600 b/d of Group II and 4,000 b/d of Group III base oils, but the producer was heard to have built inventories to cover contractual requirements during the outage. There was no producer confirmation forthcoming about the turnaround schedule.

Upstream, Brent oil prices slipped on Tuesday, under pressure from a stronger dollar and profit-taking moves, while U.S. futures held steady, resulting in a narrower discount between the two key futures contracts.

Lower-than-expected inventories in the U.S. buoyed the WTI numbers, while refinery maintenance in Europe weighed on oil prices in that region.

On Tuesday, Feb. 20, West Texas Intermediate futures closed on the CME/Nymex at $61.90 per barrel, up $2.71 per barrel from $59.19/bbl on Feb. 13.

Light Louisiana Sweet crude wholesale spot prices settled at $64.04 per barrel on Feb. 16, compared to $61.66 on Feb. 12, according to the U.S. Energy Information Administration (there was no trading on Presidents Day, Feb. 19).

Brent was trading at $65.25/bbl on the CME on Feb. 20, up $2.53/bbl from $62.72/bbl on Feb. 13.

Low sulfur vacuum gas oil was at Mar WTI plus $13/bbl ($74.34/bbl) and high sulfur VGO was at crude plus $12/bbl ($73.34/bbl) on Feb. 15 (These are the latest available settlements; there was no trading on Presidents Day, Feb. 19). In comparison, low sulfur VGO was hovering at $73.04/bbl and high sulfur VGO at $72.04/bbl on Feb. 12, 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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