U.S. Base Oil Price Report

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Following Motivas price decrease announcement last week, additional posted price adjustments emerged, with downward movements by Excel Paralubes, Chevron, ExxonMobil, Calumet and Paulsboro temporarily eclipsing news about the coronavirus outbreak.

Excel Paralubes lowered its API Group II Pure Performance 70N/80N and 110N grades by 40 cents per gallon, its Pure Performance 225N by 39 cents/gal and its Pure Performance 60N by 35 cents/gal, effective March 1.

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Chevron communicated that the company was decreasing posted prices to reflect current market conditions. The companys Group II 100R grade was lowered by 38 cents/gal, and its 220R and 600R grades by 37 cents/gal, with an effective date of March 3.

According to reports, ExxonMobil marked down all of its Group I, II and II+ grades by 30 cents/gal, with the decreases going into effect on March 5.

Calumet communicated price decreases for its paraffinic Calpar brand base oils, with its 80, 100, and 150-vis grades moving down 40 cents/gal, its 325 and 600-vis grades adjusted down by 35 cents/gal, and its bright stock by 30 cents/gal, with an effective date of March 6.

Paulsboro will be adjusting down all of its Group I prices by 30 cents/gal as of March 10.

These price revisions came hot on the heels of Motivas 40 cent-per-gallon decrease, which was implemented across the board on March 1.

The downward price adjustments were attributed to tumbling crude oil and feedstock values, together with concerns about a demand slowdown caused by the spread of the coronavirus (or Covid-19) and its impact on worldwide manufacturing operations and transportation.

Participants also pointed out that given reduced base oil demand in areas that have been hard-hit by the outbreak, such as China, Japan and South Korea, many regional suppliers were looking for alternative homes for their base oil barrels and offering them at enticing numbers. North American suppliers have therefore adjusted down pricing so as to be able to stave off some of the competition.

Market insiders also mentioned that Asian producers had trimmed operating rates at their refineries to avoid an inventory build-up of base oils in view of the uncertain demand prospects.

There were rumblings that Northeast Asian product would likely be offered to Latin American destinations, such as Mexico and Colombia. Several months ago, a rather atypical transaction involving a Taiwanese Group II cargo sold to Mexican receivers was reported, and participants said that it would not be surprising to see more of these types of offers emerge over the next few weeks.

On the naphthenic base oils front, producers were heard to be evaluating market conditions in order to decide whether any adjustments would be made.

The pale oils segment was expected to tighten up slightly as Ergon was scheduled to embark on a month-long turnaround at its plant in Vicksburg, Mississippi, on March 5. The company was heard to have restricted spot sales to be able to build inventory and cover contract demand during the outage.

Aside from the adjustments to base oils, all eyes were on developments on the crude oil side. Crude oil futures gained territory on Tuesday, reverting an extended downward trend, on expectations that government and central banks in different countries would provide financial stimulus to offset the impact of the coronavirus outbreak. There was also growing optimism that OPEC and its allies would come to an agreement regarding more extensive oil production cuts at their meeting in Vienna, Austria, later this week.

On Tuesday, March 3, WTI futures settled at $47.18 per barrel on the CME/Nymex, and had closed at $49.40/bbl on Feb. 25.

Brent futures for May delivery were reported at $51.86/bbl on the CME on March 3, from $54.95/bbl for April futures on Feb. 25.

Light Louisiana Sweet crude wholesale spot prices were unavailable this week as a result of technical difficulties with the Energy Information Administrations website. LLS crude had settled at $54.61/bbl on Feb. 24, according to the EIA.

Low sulfur vacuum gas oil and high sulfur VGO were trading at April WTI plus $11.15/bbl (or $58.33/bbl) on Tuesday, March 3, and were trading at $62.93/bbl on Monday, Feb. 24, according to OPIS PetroChemWire assessments.

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.

Historic and current base oil pricing data are available for purchase in Excel format.

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