U.S. Base Oil Price Report


Ergon, Calumet and San Joaquin Refining will be increasing naphthenic base oil prices this week, joining Cross Oil, which had announced an increase last week. A vast majority of paraffinic base oil producers also communicated increases between 15 and 40 cents per gallon, with effective dates dotted between April 26 and May 5.

Paraffinic base oil suppliers informed their customers that posted prices would be increased by 15 cents/gal, 30 cents/gal and 40 cents/gal, depending on the viscosity and location. Motiva appeared to be an exception, as the producer has not made any adjustments this week. API Group I light-viscosity grades will be moving up by 15 cents/gal, while heavy-vis grades and bright stock will, in most cases, climb by 30 to 40 cents/gal, with these cuts reported to be the tightest and most difficult to source.

Get alerts when new Sustainability Blog articles are available.


While a majority of producers’ increases were implemented last week, Paulsboro’s posted price increase of 15 cents/gal for its Group I light grades, 30 cents/gal for its heavy-viscosity grades and 40 cents/gal for its bright stock will be going into effect on May 5. The price table below was adjusted to reflect these changes.

The supply and demand situation continued to be described as critically tight, and few suppliers were able to offer spot availability. As a result, spot prices soared in recent weeks, pushing posted prices up as well.

The most dire supply situation was noted in the Group I segment. There are only a handful of domestic Group I producers, and one of these suppliers suffered an unplanned outage due to a winter storm in February, two plants had prolonged turnarounds recently, a third producer was expected to have a brief maintenance shutdown in late April, and a fourth one was currently shut down for maintenance, resulting in negligible extra availability of most Group I grades.

This has limited export business, with shipments to Mexico and other Latin American destinations almost coming to a stop in recent weeks beyond those volumes moving under contract. Only lighter grades were heard to be trickling to Mexico, India and a couple of other export markets.

Group II and Group III spot supplies were very snug as well, and prices have steadily inched up since the beginning of the year. While the lighter grades were slightly more available, sizeable cargoes of the heavy grades were difficult to locate. Group III availability, which is mostly imported into the United States, has been strained due to turnarounds at a number of major Group III plants in other regions.

Both suppliers and consumers were concerned about potential outages brought about by hurricanes. The 2021 hurricane season, which lasts from June 1 to Nov. 30, was expected to be an active one again this year, and participants have not been able to build inventories to cover possible supply disruptions as they have in the past.

Furthermore, while there has been a slight improvement in refinery operating rates, the fact that jet kerosene demand was still fairly lackluster due to coronavirus-related travel restrictions, particularly on international long-haul routes, meant that refiners continued to run at trimmed rates to avoid a build-up of inventories. This, in turn, resulted in reduced availability of feedstocks for base oil production, both on the paraffinic and naphthenic sides of the industry. However, the situation could change soon as air travel seems to be increasing, leading to improved jet fuel demand. Similarly, automotive fuel consumption has shown an uptick since the start of coronavirus vaccination campaigns.

On the naphthenic base oils front, strained supply conditions, healthy demand and firm crude oil values prompted producers to nominate price increases for early May implementation.

Ergon announced an increase in pricing of naphthenic oils in the North American market of 35 cents/gal, effective May 7. The increase will apply to all viscosities.

Calumet communicated a price increase of 35 cents/gal on all naphthenic oils, effective May 7 as well.

San Joaquin Refining informed its customers that “due to drastically changing market conditions including increased demand and supply shortages,” the company would be raising prices on all naphthenic base oils by 30 cents/gal to 40 cents/gal, depending on product and location. The increase will take effect on May 5, and will be based on ship date, not order date, the company explained.

Last week, Cross Oil announced that the price on all of its naphthenic base oils would be going up on May 5. The producer will be raising the price of its 40 SUS (Saybolt Universal Seconds) to 200 SUS grades by 25 cents/gal, 200 to 750 SUS grades by 30 cents/gal and 750 SUS grades and above by 35 cents/gal. The company also noted that orders would be limited to contract quantities during the transitional period and sales may be dependent on available inventory.

The latest series of base oil price increases, together with three previous rounds since the beginning of the year, placed increased pressure on finished lubricant, grease, additives and related products manufacturers. Many of them have announced fresh price increases of up to 12% to be implemented in early June. These would be in addition to a previous round that called for a mark-up of 3%-15% for late April/early May implementation as manufacturers try to offset the rising cost of base oil and other raw materials.

Aside from struggling to source base oils, blenders were also facing difficulties in locating additives, and a few have been forced to declare force majeure and place customers on allocation due to a lack of raw materials.

In base oil production news, Ergon’s paraffinic Group I and Group II refinery in Newell, West Virginia, began a 30-day turnaround on April 9, and was expected to complete it in the next few days. The company hoped to manage product inventories so as to minimize supply disruptions during the turnaround period and restart process.

Motiva and ExxonMobil had been forced to shut down operations in Texas in February and declare force majeure on base oil production, following sub-zero temperatures during winter storm Uri. Both suppliers restarted their plants in late March and April and were running well, according to reports. Sources also said that Motiva was shipping Group II grades under contract, but had warned customers of possible shipping delays. The producers did not comment on the status of their operations.

Upstream, crude oil futures strengthened on optimistic economic news in the U.S. and improved fuel demand in Europe, as the region hoped to attract more tourism this summer, but gains were capped by concerns about rising coronavirus cases in India.

On Tuesday, May 4, June WTI futures settled at $65.69 per barrel on the CME/Nymex, and had closed at $62.94/bbl on April 27.

Brent futures for July delivery settled at $68.88/bbl on the CME on May 4, from $66.42/bbl for June futures on April 27.

Light Louisiana Sweet crude wholesale spot prices were hovering at $66.36/bbl on May 3 and had closed at $64.12/bbl on April 26, according to the Energy Information Administration.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

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