Petro-Canada communicated to its customers that it was decreasing the price of its Group II base oils by 25 cents/gal as of Jan. 14. The producer did not revise the price of its Group II+ and Group III cuts.

Calumet will reduce prices on its Group II base oils by 25 cents/gal, effective Jan. 22. The prices of the producers Group I base oils will not be revised.

On Jan. 8, Chevron had trimmed its Group II postings by 25 cents/gal to reflect market conditions.

While a majority of Group I producers – including ExxonMobil, Paulsboro, HollyFrontier and Calumet – plus a couple of Group II suppliers had lowered their posted prices during the first half of December, many Group II suppliers had left their postings unchanged at that time, and were therefore adjusting them now, despite the climb in crude oil prices, sources speculated.

Most paraffinic base oil participants reported ample availability of most grades and considered a few segments to be oversupplied, with prices remaining under pressure.

The situation may be exacerbated as ExxonMobil is expected to bring its Group II plant in Rotterdam, the Netherlands, on stream this month or the next, which means less base stock will be shipped from the United States to Europe. As a result, the company might be increasing its sales in the domestic merchant market, sources said.

Most suppliers are expecting 2019 to be fairly challenging, as more product is introduced into the market and demand is not anticipated to show significant growth, but stay fairly flat.

There are also more volumes moving into the U.S. from the Middle East, and although this seems to affect the Group III segment the most, other segments are also impacted as buyers may be able to replace certain cuts with high performance base oils at lower prices.

In Mexico, business was heard to be steady, and consumers continue to rely on U.S. material as local product is not sufficient to meet requirements. Mexican producer Pemex is chugging along as usual, a source commented, with no expansion or upgrade at the producers facilities in Salamanca being planned.

On the naphthenic front, a majority of producers adjusted prices down between Dec. 31 and Jan. 9 and no further price revisions were reported.

The naphthenic market has been on the long side in terms of supply, but availability may tighten as San Joaquin Refining has slated a two to three-week turnaround at its base oil plant in Bakersfield, California, starting on Feb. 2. The plant can produce 8,100 barrels per day of naphthenic base oils and the refiner is building inventories to prepare for the shutdown.

In other production news, it was heard that Exxon Mobil has shut the largest of three crude distillation units at its 560,000 b/d refinery in Baytown, Texas, as part of the largest maintenance and improvement program in the sites history. The shutdown may last up to two months, Reuters reported.

The Baytown refinery houses a 9,800 b/d Group I and 18,200 b/d Group II base oils plant, but it was not clear whether the shutdown would affect production at this facility.

In terms of crude oil pricing, futures rose about three percent on Tuesday after slipping during the previous session as they received support from production cuts by OPEC members and Russia, together with signs of lower U.S. oil stocks.

Oil prices had tumbled on Monday, on expectations of an economic slowdown in China, but reports of a possible fiscal stimulus package boosted crude values on Tuesday.

On Jan. 15, WTI February futures settled at $52.11 per barrel on the CME/Nymex, up $2.33/bbl from $49.78/bbl on Jan. 8.

Brent futures for March delivery closed at $60.64/bbl on the CME on Jan. 15, and had settled at $58.72/bbl on Jan. 8.

Light Louisiana Sweet crude wholesale spot prices settled at $57.11/bbl on Jan. 14, compared to $54.37/bbl on Jan. 7, according to the EIA.

Low sulfur vacuum gas oil and high sulfur VGO were both at Feb. WTI plus $14.50/bbl ($65.01/bbl) on Jan. 14. By comparison, low sulfur VGO was hovering at $64.52/bbl, and high sulfur VGO at $64.77/bbl on Jan. 7, according to data published by PetroChemWire.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase inExcel format.