U.S. Base Oil Price Report

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Continuing the recent schizoid price movements in the U.S. base oils market, Holly has decreased its API Group I lineup by 15 to 20 cents per gallon, while Nynas raised its pale oils by 15 cents/gal.

On Aug. 6, Holly chopped 15 cents/gal from its 70, 100 and 148 vis grades while lowering its 250 and 500 vis by 20 cents/gal. Bright stock went down 15 cents/gal.

Nynas raised its naphthenic oils by 15 cents across-the-board yesterday, Aug. 10. The Nynas move wrapped up a round of price hikes that commenced several weeks ago in the pale oil sector.

Regarding price changes, please note that early additions last week incorrectly reported ExxonMobil’s Group II+ price reductions. Direct buyers have confirmed that EHC 45 (110-130) went down 23 cents to $3.29 per gallon, and EHC 60 (190) declined 20 cents to $3.24/gal. Last weeks report and price table were promptly corrected when Lube Report became aware of the error.

Market activity, although a little slow due to the summer holiday season, is considered healthy compared to some Augusts past. Many suppliers anticipate that the robust buying trend seen in recent months will continue on through early October. But whether consumers can find all their requirements remains somewhat questionable.

This may be a particular problem in the Group III arena, where availability is extremely tight, and suppliers say there is no surplus to satisfy all customer needs. Demand has been very strong, and additional volumes over and above prescheduled quantities of these quality base oils are virtually impossible to fulfill, sellers added.

Buyers were relieved when Motiva removed its sales allocation on its Group II grades about three weeks ago. Recent changes with the Chevron sales allocation have added a level of comfort for some buyers as well. At the beginning of August, Chevron removed the sales restriction on its 100R and 110RLV grades, but the company is maintaining a 75 percent sales curtailment for its 220R.

The Group I sector is also tight in availability of many grades, but heavy vis and bright stock are completely sold out thanks largely to Hollys prevailing sales control planas well as American Refining Group’s operatingissues of a month ago.

Meanwhile, it is understood that not only Gulf Coast producers but others as well continue to build up inventory positions as a preventive measure, ahead of the thick of hurricane season. Severe storms are more likely to hit the Texas and Louisiana coastlines between late August and late September.

Looking upstream, crude oil values lost some upward momentum on Tuesday following a stronger U.S. dollar against other major currencies, uncertainty stemming from a Federal Reserve meeting, and an influx of Chinese imports. Shortly following the end of the Tuesday Fed meeting, however, crude bounced off its low for the session and held onto a level of over $80 per barrel. Crude topped the $82/bbl mark last week.

In a monthly report issued by the Energy Information Administration, the agency increased its crude oil price forecast for the fourth quarter of this year to an average $81/bbl and to $84/bbl for 2011. These figures are slightly up from the agencys previous forecast. The EIA also increased its projected world oil consumption to 1.6 million barrels per day, up from 1.5 million barrels per day in its report the month before. The agency also predicts the United States will increase its consumption of crude oil significantly in 2010 and 2011.

At the close of the Tuesday, Aug. 10, NYMEX session, light sweet crude futures ended at $80.25 per barrel, a loss of $2.30 compared to the Aug. 3 settlement at $82.55/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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