U.S. Base Oil Price Report


Chevron stepped out with a price decrease on Tuesday. On the naphthenic side, Cross Oil, Calumet and San Joaquin Refining lowered prices of their base oils as well, a few days after Ergonannounced a price decrease for its pale oils.

Chevron reduced the posted price of its API Group II base oils by 25 cents per gallon, effective Jan. 8, to reflect current market conditions, a company source said.

While paraffinic base stock prices have been exposed to downward pressure due to weaker crude oil values and lengthening supply, crude oil numbers appeared to have altered their downhill course in the last few days.

However, producers were feeling the pressure of rising inventories, and the market imbalance, together with a need to gain or retain market share were likely prompting the price adjustment, sources commented.

On the naphthenic front, Cross Oil decreased its base oil prices by three to six percent, depending on the viscosity grade, effective Jan. 7.

Calumet communicated that it was lowering the price of all of its naphthenic base oil grades by 15 cents/gal as of Jan. 8.

San Joaquin Refining will also be dropping the price of its naphthenic base oils by 15 cents/gal, with an effective date of Jan. 9.

San Joaquin expects supply to tighten somewhat over the next eight weeks as the refiner is starting to store product in preparation for a plant turnaround. The maintenance program was expected to start on Feb. 2 and last two to three weeks.

Demand for both naphthenic and paraffinic base oils typically starts to pick up in February as well, as lubricant producers begin to pad inventories for the spring production cycle.

Ergons downward price revision of 15 cents/gal surfaced on the last day of 2018, taking a few participants by surprise, as a majority of naphthenic base oil producers had already decreased prices between Nov. 30 and Dec. 10.

The second naphthenic decrease was believed to have come in response to a further decline in crude oil and feedstock prices, together with softer demand and growing supply levels.

Similar conditions prompted two consecutive downward adjustments in the paraffinic base oils segment between early November and mid-December as well.

However, during the second round of decreases, while all of the Group I producers adjusted prices, in the Group II, II+ and III segments, a few suppliers abstained from revising postings. Chevron was among the producers who left prices unchanged during the second round.

This week, crude oil values remained extremely volatile, but recovered lost territory since the start of the new year.

Oil futures rose in early trading on Tuesday, supported by hopes that discussions between United States and Chinese officials might lead to the resolution of the ongoing trade dispute between the two countries. Reports of OPEC-led oil supply cuts offered additional support to futures.

On Tuesday, Jan. 8, WTI February futures settled at $49.78 per barrel on the CME/Nymex, up $4.37/bbl from $45.41/bbl on Dec. 31. There was no trading on Jan. 1 on account of the New Years Day holiday.

Brent futures for March delivery closed at $58.72/bbl on the CME on Jan. 8, and had settled at $53.80/bbl on Dec. 31.

Light Louisiana Sweet crude wholesale spot prices settled at $54.37/bbl on Jan. 7, compared to $49.95/bbl on Dec. 28, according to the EIA.

Low sulfur vacuum gas oil was at Feb. WTI plus $16/bbl ($64.52/bbl), and high sulfur VGO was at crude plus $16.25/bbl ($64.77/bbl) on Jan. 7. By comparison, low sulfur and high sulfur VGO were both hovering at $60.16/bbl on Dec. 31, 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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