U.S. Base Oil Price Report


Trailing earlier price initiatives, Phillips 66announced an increase for its API Group II+/III grades, while on the naphthenic side, Ergon andCalumet also each communicated an upward adjustment for its pale oils.

Phillips 66 will be increasing the posted prices of its Ultra-S base oils by 25 cents per gallon, effective May 1.

Ergon will increase its naphthenic base oil prices in the North American market by 20 cents/gal on all grades, effective May 3. Calumet will also lift its naphthenic base oil prices by 20 cents/gal on all grades, with an effective date of May 7.

Previously, Cross Oil had marked up the price on low viscosity naphthenic base oils by 15 cents/gal, and 12 cents/gal on high viscosity oils as of April 22.

Naphthenic suppliers have been closely watching developments in Venezuela, as political unrest in that country has resulted in a reduction of oil output. This has prompted a number of naphthenic producers to compete for naphthenic barrels of crude from other supply points, exposing these refiners even more to oil price fluctuations, according to market sources.

Base oil margins have been squeezed by steep crude oil and feedstock prices, and increase initiatives by a majority of base stock producers have been implemented to recoup part of these margins.

There has been an upward movement of spot values as well, and this has tempered buying appetite from Mexico and other export markets, which were also heard to be well-supplied and therefore not in urgent need for additional product. However, the Group I bright stock was heard to have tightened in the United States and fewer cargoes were available for export, sources said.

In the downstream finished lubricants segment, demand was characterized as adequate during April, but not particularly robust, and at this point, May is looking very slow, a supplier commented. This might be partly attributed to the imminent implementation of price hikes.

Several increase initiatives were scheduled by major oil companies and independent producers of finished lubricants, greases and additives for the first half of May, with prices expected to be adjusted up by 5 to 8 percent.

Most companies cited recent hikes in the cost of raw materials and freight as the reason for the hikes. The increase implementation coincides with a busy period in these segments as demand for finished products picks up in spring with warmer weather and the start of the summer holidays, sources explained.

Upstream, crude oil futures inched higher on Tuesday on reports that the U.S.-backed interim President of Venezuela, Juan Guaido, had attempted a military coup against Venezuelas Maduro, according to Reuters. The sociopolitical turmoil in Venezuela has resulted in crude production outages, and this, coupled with U.S. sanctions on Iranian oil exports, has led to a decrease in global crude supply.

Oil prices slumped last week as Saudi Arabia was expected to increase production to make up for the output loss, but Saudi Arabias Energy Minister Al-Falih said this week that his country will only replace Iranian oil if the demand is there, and did not seem keen to produce additional barrels to keep prices down as President Trump had suggested. Furthermore, the official also indicated that OPEC could possibly extend the current production cuts, and this provided support to oil values this week.

On April 30, West Texas Intermediate April futures settled at $63.91 per barrel on the CME/Nymex, down $2.39/bbl from $66.30/bbl on April 23.

Brent futures for June delivery closed at $72.80/bbl on the CME on April 30, and had settled at $74.51/bbl on April 23.

Light Louisiana Sweet crude wholesale spot prices settled at $70.69/bbl on April 26, compared to $72.91/bbl on April 22, according to the Energy Information Administration.

Low sulfur vacuum gas oil was at June WTI plus $15.25/bbl ($78.75/bbl); high sulfur was at crude plus $15.50/bbl ($79.00/bbl) on April 29. By comparison, low sulfur VGO was hovering at $80.45/bbl and high sulfur VGO at $80.70/bbl on April 22, 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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