U.S. Base Oil Price Report


Petro-Canada and SK wrapped up the round of increases that Chevron initiated at the end of January by communicating adjustments for their API Group II+/III base oils, driven by steep crude oil and feedstock values and other mounting production costs.

Petro-Canada raised its API Group II+/III postings by 20 cents per gallon on February 21. The producer had previously lifted the price of its Group II base oils by 20-22 cents/gal, with an effective date of Feb. 2.

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SK also communicated that the company would increase its Group II+/III prices by 20 cents/gal across the board effective March 1.

It was heard that Ergon had increased its paraffinic base oils HyGold P40N, P70N, P100N, and P300N by 20 cents/gal and its heavy-vis oils P600N, P150BS, and 5000BS by 15 cents/gal as of Feb. 23. The company does not currently post prices on the Price Table below.

A vast majority of paraffinic producers have now implemented mark-ups ranging from 15 to 22 cents/gal during the month of February as a means to recoup margins, which have been squeezed by stronger crude oil values and other escalating costs.

Despite the fact that base oil suppliers had already lifted postings in January, they were not deemed sufficient to cover the climbing production expenses, sources said.

While crude oil futures wavered and receded earlier this month, they have bounced back somewhat, although values saw a sharp decline from three-week highs on Tuesday on expectations of a weekly build in U.S. crude stockpiles and ongoing concerns over increased domestic production. Reports that OPEC may be rescinding their production cuts in 2019 also weighed on prices.

West Texas Intermediate futures settled at $63.01 per barrel on the CME/Nymex on Tuesday, Feb. 27, up $1.11/bbl from $61.90/bbl on Feb. 20.

Light Louisiana Sweet crude wholesale spot prices settled at $66.19 per barrel on Feb. 26, compared to $64.04/bbl on Feb. 16, according to the U.S. Energy Information Administration.

Brent was trading at $66.63/bbl on the CME on Feb. 27, up $1.38/bbl from $65.25/bbl on Feb. 20.

Low sulfur vacuum gas oil was at Apr WTI plus $12.25/bbl ($76.16/bbl) and high sulfur VGO was at crude plus $11.50/bbl ($75.41/bbl) on Feb. 26. By comparison, low sulfur VGO was hovering at $74.90/bbl and high sulfur VGO at $73.90/bbl on Feb. 20, according to data published by PetroChemWire.

In other market news, sources said that the Japanese government continues to implement measures to streamline the refining sector, and there could be further refinery closures in the next couple of years. Some of these refineries house base oil plants, and production could sharply fall in the country after the closures, making Japanese lubricant producers more dependent on base oils imports. This could mean added opportunities for U.S. and other suppliers, sources noted.

Japan has cut its refining capacity to 3.52 million barrels per day from 4.89 million b/d in 2009, and improved the ratio of residue cracking capacity to crude distillation unit capacity to 50.5 percent, a Reuters article showed.

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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