U.S. Base Oil Price Report

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Please note: An updated version of this week’s U.S. Base Oil Report follows, and it includes ExxonMobil’s latest price increase information. The price table below was also updated.

Several paraffinic producers, including Chevron, Calumet, HollyFrontier, Petro-Canada, Safety-Kleen,  SK Americas and ExxonMobil, communicated price increases this week, following Motiva‘s initiative that raised its API Group II and Group III prices on Sept. 7. Participants kept an anxious eye on Hurricane Sally, which was forecast to make landfall in southeast Louisiana, Mississippi, Alabama and parts of Florida late Tuesday or early Wednesday. 

In terms of pricing news, Chevron announced that effective Monday, Sept. 14, its United States Gulf Coast posted pricing would increase to reflect current market conditions. The company’s Group II 100R base oil increased by 15 cents per gallon; its 220R grade went up by 25 cents/gal, and its 600R grade by 20 cents/gal.

Along similar lines, Calumet lifted posted prices for its Group I and II base oils on Sept. 14. The producer’s Group I Calpar 60 and Group II 75/80, 100 and 150 base oils were raised by 15 cents/gal; its Group II Calpar 325 increased by 25 cents/gal; its Group I Calpar 600 by 20 cents/gal and its Calpar 2500 (bright stock) by 30 cents/gal.

HollyFrontier raised its Group I SN70-250 grades by 15 cents/gal, its SN525 by 20 cents/gal and its bright stock by 25 cents/gal, with an effective date of Sept. 14.

Similarly, Petro-Canada increased its Group II, II+ and III posted prices on Sept. 14. The Group II 70 vis was marked up by 20 cents/gal, the 100/120 vis by 15 cents/gal; the 200, 300/350, and 600/650 vis by 25 cents/gal. The producer’s Group II+ 65 cut was raised by 20 cents/gal and its 100 grade by 15 cents/gal. All of the supplier’s Group III cuts (4 cSt, 6 cSt, 8 cSt) moved up by 15 cents/gal.

SK Americas communicated that the company would raise its posted prices for Group II+ and Group III by 15 cents/gal, effective Sept 16.

According to reports, ExxonMobil will be increasing its posted prices with an effective date of Sept. 18. The producer will lift its Group I heavy-vis grade SN600 by 20 cents/gal, its bright stock by 25 cents/gal and its Group II and II+ EHC 45 and 65 grades by 20 cents/gal. The Group I light and mid-vis grades will not be adjusted.

Paulsboro typically implements similar increases to ExxonMobil a week later, but no details were available at the time of writing.

Rerefiner Safety-Kleen communicated that the company would be increasing Group II+ posted prices by 15 cents/gallon on the 120 vis grade, and 25 cents/gal on the 220/240 vis grade, effective Tuesday, Sept. 15. 

Last week, Motiva increased its Group II and III base oils by 15, 20 and 25 cents/gal, depending on the grade, with the hikes being implemented on Sept. 7.

A handful of producers had already increased prices in mid-. At that time, ExxonMobil, Paulsboro and Avista Oil had lifted their posted prices by 15, 25 and 30 cents/gal.

The latest round of adjustments was thought to have been fueled by tightening conditions caused by hurricane-related output disruptions and firm feedstock prices over the last few months. Two hurricanes, Marco and Laura, had forced producers along the United States Gulf Coast to dial down operating rates or shut down production three weeks ago.

While most of the facilities have since restarted, the Excel Paralubes Group II base oil plant in Westlake, near Lake Charles, Louisiana, was heard to be still down due to a power outage. The plant has capacity to produce 22,200 barrels per day of Group II base oils and is located in the Phillips 66 refinery complex, which was shut down ahead of Hurricane Laura.

Phillips 66 reported in an online statement that recovery work was in progress for the company’s assets that had been impacted by the storm. The Beaumont Terminal in Nederland, Texas, resumed operations, and the Gulf Coast Lubricants Plant in Sulphur, Louisiana, restarted operations which are currently limited by electric power curtailments, the statement said. “The Lake Charles Manufacturing Complex continues to make necessary repairs and initial preparations for a facility restart in the coming weeks. This timeline is contingent upon access to reliable electricity and other utilities in the region,” the company added.

This week, another storm was threatening to disrupt production on the U.S. Gulf Coast. Hurricane Sally was churning in the Gulf of Mexico and was expected to make landfall as a Category 1 hurricane late on Sept. 15 through early Sept. 16, bringing heavy rain and the possibility of floods. A number of refineries and plants were on the predicted path of the storm.

At the time of writing, Chevron’s 356,440 barrel-per-day Pascagoula, Mississippi, refinery appeared to be running normal operations, market sources said, but this could not be confirmed with the producer directly. The refinery houses Chevron’s 25,000 bbl/day Group II base oils plant.

However, Chevron Corp. did shut its Blind Faith and Petronius offshore production platforms in the Gulf of Mexico on Sunday, Sept. 13, in preparation for the severe weather, the company stated online.

Ergon‘s refinery in Vicksburg, Mississippi, was operating normally. “We are not anticipating impact to our refinery operations,” a company source said.

Calumet’s base oil units in Princeton and Shreveport, Louisiana, were also operating at normal rates, according to a company source.

Phillips 66 began to shut its 255,600 barrel-per-day Alliance, Louisiana, refinery, which is located south of New Orleans, on Sunday because of the threat from Sally, an online company statement said. “The refinery’s hurricane response plans and procedures are being followed,” the statement added. The Phillips 66 Alliance refinery does not have a base oil plant.

Aside from the catastrophic human and economic impact these storms bring, the potential loss of additional Group II production would impair U.S. availability of these grades even further and drive inventories to challenging low levels. Suppliers were anticipated to focus on meeting domestic contract demand, and reduce or suspend spot export offers.

Group I supplies were very snug in the U.S. as well, given healthy domestic and export demand. A number of blenders have secured Group II cargoes to use as a replacement for Group I oils whenever possible, and this also contributed to the tightening of Group II availability.

On the naphthenic base oils side, there were no significant price revisions reported, with supply and demand deemed fairly balanced.

Market players were watching crude oil price developments, as expectations of increased output versus weaker global demand were expected to continue placing pressure on numbers.

Crude oil futures traded lower on Tuesday on concerns about a supply glut and reduced worldwide demand on the back of the coronavirus pandemic, which was still causing an increase in infections in many countries.

On Tuesday, Sept. 15, October WTI futures settled at $38.28 per barrel on the CME/Nymex and had closed at $36.76/bbl on Sept. 8.

Brent futures for November delivery closed at $40.53/bbl on the CME on Sept. 15, from $39.78/bbl on Sept. 8.

Light Louisiana Sweet crude wholesale spot prices settled at $38.73/bbl on Sept. 14 and had closed at $42.19/bbl on Sept. 4, according to the Energy Information Administration (there was no trading on Sept. 7 due to the Labor Day holiday).

Vacuum gas oil (VGO) was trading at WTI plus $6/bbl (or $44.28/bbl) on Tuesday, Sept. 15, and had traded at $42.76/bbl on Sept. 8, according to OPIS/PetroChem Wire assessments.

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

Posted Paraffinic Base Oil Prices

September 16, 2020

(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

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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Base Oil Pricing Report    Market Sectors