U.S. Base Oil Price Report


A splash of naphthenic price hikes hit the market during the past week, wrapping up a round of increases for pale oils that was initiated by Nynas the previous week.

Ergon, Cross Oil, Calumet and San Joaquin Refining revealed their plans of upping prices between 30 and 40 cents per gallon. All API Groups I through III+ paraffinic postings were recently and successfully adjusted upward by a wide range of 30 cents/gal to 70 cents/gal.

Ergon told its customers that it will add 35 cents/gal to all its pale oils, effective March 11.

Cross Oil moved prices on all its pale oils by 35 cents/gal, also with an effective date of March 11.

Calumet will follow suit and increase its line-up of naphthenic base oils by 35 cents/gal, effective March 15.

Previously, San Joaquin said that it upped its pale oil cuts on March 1, but did not identify the amounts. The company had told its indexed customers that it was focusing on market pricing while pulling away from benchmark WTI crude-related pricing. Given the various end-uses involved and starting price points, increases varied depending on account. Subsequently, SJR has issued a fresh price announcement outlining that it plans to bump up all products between 30 cents/gal and 40 cents/gal, effective March 14.

While demand continues at a healthy pace, sources from both the paraffinic and naphthenic sectors say that overall availability remains tight. Some suggest that finding additional volumes is still quite difficult, even for contract customers. Pure spot activity remains thin, as it has for some time, traders added.

Meanwhile, base oil producers are keeping a close watch on upstream developments. In the last three weeks, crude oil values have risen an estimated $20 per barrel. This climb, along with already high vacuum gas oil prices (currently at a $19 to $23 per barrel premium to WTI), placed a tremendous weight on operating costs. Operators are lamenting lost margins, despite the recently implemented round of posted price hikes.

In its monthly short-term outlook report released on Tuesday, the U.S. Department of Energy said it expects world oil markets to tighten over the next two years with the average oil price rising to $105 a barrel in 2012. The department went on to say that uncertainty about oil production in North Africa and the Middle East, the world’s largest oil-producing region, is a major factor.

Additionally, the government expects a loss of oil production from Libya will be covered by increased production in other OPEC countries. According to news reports, Saudi Arabia, the biggest of the 12-nation Organization of the Petroleum Exporting Countries, has said it will cover any shortfall caused by strife in the region.

At the close of the Tuesday, March 8, NYMEX session, front month light sweet crude oil futures ended the day at $105.02 per barrel, a sizeable gain of $5.39 from the week earlier settlement at $99.63/bbl.

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

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other