U.S. Base Oil Price Report


Calumet rounded off the latest string of price increases by raising the posted price of its API Group I bright stock, while Paulsboros and SK Americas mark-ups were implemented early this week.

Calumet communicated that it was lifting the posted price of its bright stock by 10 cents per gallon, effective April 4. The producers Group I 600N cut will not be adjusted at this time. Previously, Calumet had increased pricing on all of its Group II oils by 20 cents/gallon as of March 27, but had not revised its Group I postings.

Paulsboro Refining Co. increased all of its Group I grades by 10 cents/gal on April 1, with the exception of the heavy-vis cuts. Likewise, SK Americas raised the price of its Group II bright stock by 10 cents/gal on the same date.

The latest series of increases was spearheaded by Motiva, with the refiner increasing all of its Group II postings by 10 cents per gallon, and its Group III postings by 5 cents/gal on March 14.

A majority of paraffinic base oil producers revised up their posted price ranges, with numbers moving up anywhere between 5 cents to 25 cents per gallon, depending on the grade and the supplier. Among the Group III suppliers, Motiva was the only producer to adjust prices at this time.

On the naphthenic front, several price hikes also emerged within the last couple of weeks. Ergon, Calumet and San Joaquin Refining Co. increased prices by 15 cents/gal across the board between March 25 and March 29, while Cross Oil implemented 10-15 cents/gal hikes on March 22.

Market activity was described as average this week as the different sectors were busy absorbing the price hikes and capturing improved demand levels.

The climbing base oil values – which were mostly driven by escalating feedstock and production costs, together with more vigorous buying appetite – also triggered increases in downstream finished lubricant segments, expected to be implemented in May. (For further details, see George Gills story in this weeks Lube Report).

Indeed, crude oil futures were trading at five-month highs, with numbers inching up on Tuesday on reports of a January drop in the average daily U.S. crude oil production for the first time in nearly six months.

The collapse of oil prices late last year, along with pressure from shareholders, has led to a slowdown in the U.S. shale industry, analysts explained.

Aside from the decline in pricing, the growing recognition of the parent-child well problem –

or the unexpected poor performance of subsequent wells drilled in close proximity to the original parent well – placed pressure on oil companies, forcing them to implement cost cutbacks, OilPrice.com reported.

Schlumberger and Halliburton, the two top oilfield services companies, have predicted that shale drillers will be forced to collectively cut spending by more than 10 percent this year.

Meanwhile, crude prices also received support from ongoing output disruptions in Venezuela and transportation issues caused by a fire and chemical spill on the Houston Ship Channel the previous week.

On April 2, West Texas Intermediate April futures settled at $62.58 per barrel on the CME/Nymex, up $2.64/bbl from $59.94/bbl on March 26.

Brent futures for June delivery closed at $69.37/bbl on the CME on April 2, and had settled at $67.97/bbl on March 26.

Light Louisiana Sweet crude wholesale spot prices settled at $67.84/bbl on April 1, compared to $64.46/bbl on March 25, according to the Energy Information Administration.

Low sulfur vacuum gas oil was at May WTI plus $14.75/bbl ($76.34/bbl); high sulfur VGO was at crude plus $14.00/bbl ($75.59/bbl) on April 1. By comparison, low sulfur VGO closed at $73.82/bbl and high sulfur VGO at $72.82/bbl on March 25, 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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