U.S. Base Oil Price Report

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The approach of the summer holiday period and the long Memorial Day weekend led to a more sedate trading pace, although a majority of participants appeared satisfied with the level of business seen over the last two weeks.

Producers noted that demand had improved, despite the implementation of price hikes earlier in the month, and some segments of the market reported tightening supply conditions.

The API Group I sector has shown an increase in demand levels and producers reported balanced positions, with availability of some grades such as bright stock heard to be more limited and not as readily available for spot business as other cuts.

Given the current supply/demand conditions, and the recent increases for domestic pricing, suppliers have been trying to achieve higher price levels for export transactions. One seller said they had turned down orders into Mexico for the time being as prospective buyers were hoping to buy at the old price. A second refiner was understood to have raised its prices in Mexico already.

The snug conditions within the Group I segment were also partly attributed to turnarounds at a number of facilities. American Refining Group was heard to have wrapped up a maintenance program at its Bradford, Pennsylvania, plant, while Paulsboro was understood to have restarted its plant in New Jersey last week, which had been taken off-line during a turnaround at an upstream crude unit.

There were also reports that Calumet had completed maintenance at one of its plants, but further details were not forthcoming.

While suppliers were also hoping to attain increases for Group II spot transactions, sources said this was difficult as supply was more plentiful than for Group I cuts. Suppliers were also facing some pressure on the export side as price levels in Europe and Asia were deemed quite competitive and remained weighed down by oversupply.

Upstream, crude oil futures were mixed on Tuesday after the Memorial Day holiday given investor concerns that the ongoing United States-China trade conflict would negatively impact crude demand despite OPECs production cuts. Oil exports from Iran have also fallen due to U.S. sanctions, while production outages in Venezuela have contributed to a reduction in oil supply.

On May 28, West Texas Intermediate July futures settled at $59.14 per barrel on the CME/Nymex, down $3.85/bbl from $62.99/bbl on May 21.

Brent futures for July delivery closed at $70.11/bbl on the CME on May 28, and had settled at $72.18/bbl on May 21 for June futures.

High sulfur vacuum gas oil was at July WTI plus $17.75/bbl ($76.38/bbl); low sulfur was at crude plus $17.50/bbl ($76.13/bbl) on May 24. There was no trading on May 27 due to the Memorial Day holiday. By comparison, low sulfur VGO was hovering at $80.85/bbl and high sulfur VGO at $81.10/bbl on May 20, according to data published by OPIS 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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