U.S. Base Oil Price Report


SK Americas communicated a price increase for its API Group II bright stock, while the market was still digesting the recent round of posted price hikes which were implemented over the last two weeks. This was the second series of increases since March 14, when Motiva first kicked off an initiative for its Group II and III base oils.

SK will be raising the price of its Group II bright stock by 35 cents per gallon, effective May 1. This price revision comes on the heels of similar adjustments implemented by Group I producers on their bright stock between April 18 and April 23.

Aside from Group I base oils, a majority of paraffinic base stock producers increased prices for Group II and II+ cuts. With the exception of Motiva, none of the Group III suppliers marked up postings at this time. The initiatives lifted prices by 15, 20, 25, 30 and 35 cents/gal, depending on the base oil and the producer.

On the naphthenic front, Cross Oil increased the price on low viscosity base oils by 15 cents/gal, while its high viscosity base oils edged up by 12 cents/gal as of April 22. While no other pale oil initiatives surfaced this week, it was heard that other suppliers were mulling adjustments as margins have tightened considerably.

Producers reiterated that the hikes were prompted by the relentless rise in crude oil and feedstock prices and related increases in transportation and production costs over the last two months, which producers were no longer able to absorb.

Base oil demand was heard to have improved since the beginning of the month, perhaps as a result of increased activity in downstream lubricant segments. A number of lubricant suppliers said that orders had started to pick up as buyers were likely trying to beat the finished lubes and additives price increases due to be implemented in early May.

On the other hand, buying appetite from Mexico was said to have subsided somewhat, and this was attributed to the higher prices in the U.S., while interest from Brazil and some countries in Africa remained healthy.

Upstream, crude oil futures surged as the United States vowed to reduce Iran crude exports to “zero” by removing the waivers that previously allowed some countries to buy Iranian crude. The Trump administration demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, sending crude prices to six-month highs on concerns of a potential supply shortage. However, Saudi Arabia and the United Arab Emirates were anticipated to adjust production so as to compensate for the shortfall in the oil market.

The U.S. reimposed sanctions on exports of Iranian oil last November after Trump unilaterally pulled out of a 2015 agreement between Iran and six world powers to curb Tehrans nuclear program. Eight countries, including China and India, were granted waivers for six months, and some of these nations had expected those exemptions to be renewed.

On April 23, West Texas Intermediate April futures settled at $66.30 per barrel on the CME/Nymex, up $2.25/bbl from $64.05/bbl on April 16.

Brent futures for June delivery closed at $74.51/bbl on the CME on April 23, and had settled at $71.72/bbl on April 16.

Light Louisiana Sweet crude wholesale spot prices settled at $72.91/bbl on April 22, compared to $70.93/bbl on April 15, according to the Energy Information Administration.

Low sulfur vacuum gas oil was at May WTI plus $14.75/bbl ($80.45/bbl); and high sulfur VGO was at crude plus $15/bbl ($80.70/bbl) on April 22. By comparison, low sulfur vacuum VGO was hovering at $78.00/bbl and high sulfur VGO at $78.25/bbl on April 15, according to data published by OPIS 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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