U.S. Base Oil Price Report


Flint Hills Resources issued a fresh price announcement, adding 20 cents per gallon to all grades. Whether other U.S. producers follow suit remains to be seen, but a number of players anticipate a full round of hikes will materialize in coming weeks given rising, albeit somewhat unpredictable, upstream costs.

FHR told its customers that it raised all its API Group II posted prices by 20 cents per gallon on Tuesday, April 13. FHR markets half of the output of the 21,900 barrel per day Excel Paralubes refinery in Westlake, La.

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The market had endured a complete series of posting increases in March following several months of rising crude and vacuum gas oil prices.

According to a few sources, producers are determined to keep margins from deteriorating further, saying that bottom lines have suffered despite the two full rounds of hikes already implemented this year.

Some keen observers suspect that posted prices will continue to trek higher alongside heightened base oil demand and shrinking availability. So far, demand has proved to be surprisingly healthy with overall sales improving every month since the start of year across much of the U.S.

The West Coast, however, continues to have economic struggles, which has impacted base oils and finished lubricant activity in that region, according to a few participants.

Looking upstream, although crude values are over $80 per barrel, they have slipped from highs above $87/bbl reached last week. Some market watchers believe that the recent decline came as oil traders contemplated whether a slowly recovering U.S. economy could justify the two-month, 25 percent crude rally. (Crude jumped above $87/bbl last week from $69/bbl in early February.)

Recent economic news has been reassuring, say several energy experts, reinforcing the notion of a broadening recovery which is expected to continue to support energy and industrial metals prices going forward.
Steeper crude oil prices have also been supported by the latest forecast from the International Energy Agency, predicting world demand will rebound this year to hit its highest-ever annual level.

This week, the IEA said average global oil demand will hit a record high of 86.6 million barrels per day in 2010, as rapid growth of 1.67 million bpd wipes out two years of falling consumption caused by higher prices and the economic crisis.

At the close of the Tuesday, April 13, NYMEX session, front month light sweet crude oil futures ended the day at $84.05 per barrel, a loss of $2.79 from the week earlier settlement at $86.84/bbl.

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

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