U.S. Base Oil Price Report

Share

Additional posted price increase announcements trickled into the market this week, with Chevron, Motiva, HollyFrontier, Excel Paralubes, Calumet, Avista Oil and Paulsboro communicating adjustments. There were reports that ExxonMobil would raise prices as well, and Phillips 66 will adjust postings for the second time in less than a month.

Chevron announced a posted price increase of 30 cents per gallon for its API Group II 100R base oil, 26 cents/gal for its 220R cut, and 25 cents/gal for its 600R grade, effective Dec. 8.

Get alerts when new Sustainability Blog articles are available.

Loading

Motiva communicated a price increase of 20 cents per gallon for its Group II aramcoPRIMA 100 grade and its Group III aramcoULTRA 4 and 6 grades. The producer’s Group II 220 and 600 cuts will move up by 25 cents/gal, effective Dec. 9.

Excel Paralubes communicated that posted prices of its Pure Performance® Group II base oils would be increased by 25 cents/gal, but its 600N grade will be raised by 30 cents/gal. The markups go into effect on Dec. 9.

Phillips 66 also notified customers that the company was lifting its Ultra-S® base oil posted prices on Dec. 9. The supplier’s Group II+ and Group III base oils will be adjusted up by 25 cents/gal across the board. This is the second increase in about a month, since Phillips 66 had also increased prices by 25 cents/gal on Nov. 18.

HollyFrontier will be lifting its Group I SN70, SN100, SN148 and SN250 grades by 20 cents/gal, and its Group I SN560 and bright stock by 30 cents/gal, with an effective date of Dec. 10.

According to market sources, ExxonMobil will be increasing its Group I and II/II+ base oils by 20 cents/gal, with the exception of the Group I 600 and bright stock grades, which will edge up by 30 cents/gal. The increases will become effective on Dec. 10. 

Calumet will be lifting its Group II 75-150 vis grades by 20 cents/gal, its Group II 325 vis by 25 cents/gal and its Group I 600 vis and bright stock by 30 cents/gal, with an effective date of Dec. 14.

Paulsboro will be raising the price of its Group I light and mid-viscosity grades by 20 cents/gal and its heavy-vis and bright stock cuts by 30 cents/gal, effective Dec. 15.

Rerefiner Avista Oil notified its customers that the company would be increasing prices for its Group II+ and III base oils by 30 cents/gal on Dec. 7.

The increases were driven by a tight supply/demand balance and climbing crude oil and feedstock values, sources said. Vacuum gas oil traded at nine-month highs due to rising crude oil prices and increased demand from the marine fuel blending sector. Many refineries have also been running at trimmed run rates since earlier in the year due to the fuel demand destruction brought about by the pandemic.

Availability of a majority of base stocks has been strained since September on the back of reduced output following Hurricane Laura, healthy domestic demand and intense buying appetite from the export segment, with numerous United States base oil shipments moving to India, Mexico and Brazil.

The Group III segment was also snug due to reduced import volumes earlier in the year, following lockdowns, plant shutdowns and transportation delays, and heightened demand from the automotive segment once the lockdowns had been lifted in June.

On the naphthenic side, Ergon was reported to have notified customers of a 20 cent/gal price increase for its pale oils, which will go into effect on Dec. 11, with the company’s bright stock going up by 30 cents/gal on the same date. However, this adjustment could not be confirmed with the company directly by the publishing deadline.

Calumet announced a price increase on all naphthenic grades of 25 cents/gal, effective Dec. 18.

Another naphthenic oil producer, Cross Oil, completed the process of adjusting prices on all of its base oil accounts on Dec. 1, although the initiative had been first announced a few weeks back. The company increased its light grades by 25 cents/gal and its heavy cuts by 20 cents/gal on escalating costs of crude and crude handling, and a weak distillate market.

Cross Oil has also scheduled a 21-day turnaround at its naphthenic base oils plant in Smackover, Arkansas, in early March.

Naphthenic base oils have enjoyed steady demand, with availability tightening in recent weeks due to increased buying interest from both the domestic segment and Latin America, the Middle East and Asia.

There were discussions in downstream lubricant, grease and additives circles about the possibility that prices would have to be adjusted, given the recent round of base oil price increases.

Whether domestic demand for both naphthenic and paraffinic base stocks will continue on a steady course remained to be seen, as fresh lockdowns and stay-at-home orders in various states due to a dramatic spike in coronavirus cases may result in reduced mobility and a consequent drop in fuel and lubricant consumption.

Most experts predicted that the demand destruction seen in 2020 would not recover lost territory until the second half of 2021 or later, but the start of coronavirus vaccination inspired hopes of a return to a more “normal” business environment next year.

The effects of the pandemic have been disastrous for crude oil demand, explained James Dennis, ICIS’ Asia crude editor, during the ICIS Pan American virtual base oils conference last week. “Global oil demand is forecast to fall 8-9% in 2020, even after a Q3 recovery, but will potentially increase 3-4% in 2021, according to the IEA (International Energy Agency),” Dennis noted.

The refining segment that has experienced the most dramatic impact in terms of demand destruction is the jet kerosene sector given the sharp drop in air travel, with the IEA estimating that global jet fuel demand would fall by 39% in 2020, according to Dennis. The slump in jet fuel demand has forced many refineries to run at reduced operating rates for most of the year.

Gasoline demand has also suffered throughout 2020, but the effects of the pandemic were particularly evident during the Thanksgiving holiday – a time when many people take to the road.

U.S. motorists stayed off the road during Thanksgiving in overwhelming numbers as the coronavirus surged across the country, according to the latest weekly survey of retail fuel stations by OPIS, an IHS Markit company. Gasoline sales fell a staggering 8.4% (nearly 185 million less gallons) from the previous week for the seven-day period ending November 28, bringing consumption to the lowest level for a Thanksgiving Week in 23 years, going back to 1997, the OPIS report added.

This week, crude oil futures were trading at lower levels due to worries about the increasing number of coronavirus cases in the U.S., as California and other states tightened their lockdowns. There was additional downward pressure from building inventories as the American Petroleum Institute reported on Tuesday a build in crude inventories of 1.14 million barrels for the week ending on Dec. 4. Analysts had predicted a larger draw.

There were also bullish elements as observers expected crude values to strengthen once the vaccine gets deployed, but economic uncertainties will be dampening numbers in the short term, analysts said.

On Tuesday, Dec. 8, January 2021 WTI futures settled at $45.60 per barrel on the CME/Nymex and had closed at $44.55/bbl on Dec. 1.

Brent futures for February delivery settled at $48.84/bbl on the CME on Dec. 8, from $47.42/bbl on Dec. 1.

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.

Related Topics

Base Oil Pricing Report    Base Stocks    Market Topics    Other