U.S. Base Oil Price Report

A couple of fresh price adjustments emerged, with Phillips 66 and Petro-Canada communicating increases on their API Group II+ and III postings, while previously announced price hikes will go into effect this week.

Phillips 66 informed customers that the company will raise posted prices for its Group II+ Ultra-S2 and Ultra-S3 base oils by 24 cents per gallon, while its Group III Ultra-S4 and Ultra-S8 cuts will increase 22 cents/gal as of January 25.

Petro-Canada will lift its Group II+ 65N cut by 24 cents/gal, and its Group III 4 centiStoke, 6 cSt and 8 cSt grades by 22 cents/gal, effective Jan. 26.

Meanwhile, the increases announced over the last couple of weeks by ExxonMobil and HollyFrontier will go into effect this week, as reflected in the price table below.

HollyFrontier will lift its Group I postings by 15 cents/gal on Jan. 26, with the exception of bright stock, which will remain unchanged. According to sources, ExxonMobil will also mark up the price for most Group I base oils by 15 cents/gal, but there will be no change for bright stock. The producers Group II and II+ cuts will be raised by 22 cents/gal as of Jan. 26.

Paulsboros Group I increases will not be portrayed until the issue dated Jan. 31, which is when the 15-cent/gal hike will be implemented.

Sources also commented that Motiva had increased the price of its two Group III base oil grades, which the company officially launched last December. The amount of increase was 10 cents/gal, identical to the one applied to the producers Group II grades on Jan. 5.

A majority of paraffinic and naphthenic producers have marked up prices since early January due to the relentless climb in crude oil and feedstock costs, coupled with a balanced-to-tight supply situation.

The base oil price hikes also triggered markups in the finished lubricants and derivatives segment, with ExxonMobil, Citgo, Chemlube, Martin, and Omni Specialty Packaging, among others, announcing increases (for further details, please see More U.S. Finished Lube Price Hikes in this issue of Lube Report).

Base oil participants said that despite the price hikes, demand had remained steady and availability of a few grades was still considered limited due to the fact that several producers had ended the year with lean inventories.

Upstream, crude oil futures edged up on Tuesday, boosted by a positive outlook for the global economy this year and the next, and by the continued production cuts implemented by OPEC members and non-member oil producers like Russia.

The International Monetary Fund revised up its projections for global growth by 0.2 percentage points to 3.9 percent for 2018 and 2019, reflecting increased global growth momentum and the anticipated impact of the U.S. tax policy overhaul.

Reuters also reported that Russian pension funds were considering investing in state oil major Saudi Aramco when it lists its stock, in a move to strengthen the partnership between the worlds two top oil producers.

On Tuesday, West Texas Intermediate futures closed on the CME/Nymex at $64.47 per barrel, up 74 cents per barrel from $63.73/bbl on Jan. 16. Light Louisiana Sweet wholesale spot prices settled at $67.89 per barrel on Jan. 22, compared to $68.87 on Jan. 12, according to the U.S. Energy Information Administration. Brent was trading at $70.14/bbl on the CME on Jan. 23, up 99 cents/bbl from $69.15/bbl on Jan. 9.

Low sulfur vacuum gas oil was at Feb WTI plus $16.50/bbl ($79.99/bbl) and high sulfur VGO was at crude plus $14.75/bbl ($78.24/bbl) on Jan. 22. In comparison, low sulfur VGO was hovering at $79.23/bbl and high sulfur VGO at $77.98/bbl on Jan 16, according to data published by PetroChemWire.

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