U.S. Base Oil Price Report


More price announcements reached the U.S. base oil marketplace this week. Cross and Calumet each plan to lower pale oil prices by 10 cents to 15 cents per gallon, and HollyFrontier is dropping 10 cents/gal from its bright stock posting.

Cross Oil said it lowered prices on its lineup of pale oils yesterday, Oct. 4, by 10 cents/gal for light and mid vis grades, while decreasing heavier viscosity cuts by 15 cents/gal. Cross Oils Smackover, Ark., plant has 5,000 barrels per day of naphthenic capacity.

Calumet said it plans to slash its naphthenic base stock prices between 10 and 15 cents/gal as well. Calumet told its customers that lower prices would become effective on Oct. 13. The company said it would take off 10 cents/gal on light vis pale oils up to and including 500 vis. Cuts from 600 vis and heavier will go down 15 cents/gal. Calumet has capacity to produce 6,900 b/d of pale oils in Princeton, La., and another 100 b/d in Shreveport.

San Joaquin Refining indicated it was not prepared to follow other naphthenic October price decreases, but would be keeping an eye on the market. For now, the company said that supply/demand fundamentals at its 8,100 b/d Bakersfield, Calif., plant are well balanced.

HollyFrontier informed customers that its posting for API Group I bright stock will be cut by 10 cents/gal effective today, Oct. 5. HollyFrontier makes 9,500 b/d of Group I base oils in Tulsa, Okla.

Other than HollyFrontiers bright stock move, all was quiet on the paraffinic pricing front, with no chatter that Group II or III producers may step out with decreases to follow the path that Group I suppliers took some weeks back.

Sources still see a good amount of stability within the Group II and III categories as overall supply remains tight and demand healthy. There does appear to be a slight overhang of certain Group I grades, they added, hence the recent price cut of 10 to 20 cents/gal pushed through in mid-to-late September – and an uptick in export activity.

Meanwhile, the U.S. economic outlook appeared less rosy than some experts had outlined just last month. The Standard & Poor’s 500 index has certainly been more on the downside than up in recent weeks, wiping out some strong gains seen earlier this year.

Analysts attribute much of the stock markets erratic behavior to global woes, pointing mainly to Europe’s debt crisis. On Tuesday, European finance ministers suggested at a meeting that holders of Greek debt may be required to take larger losses than originally thought, which would hurt banks that hold Greek bonds.

In testimony before Congress this week, Federal Reserve Chairman Ben Bernanke said that the economy is weaker than the central bank expected and that poor job growth continues to undercut consumer confidence. He also said, The central bank is prepared to take further steps to stimulate the economy, while warning Congress that deep spending cuts may impede a recovery.

Upstream, WTI crude futures have certainly tumbled along with the stock markets. On Tuesday, WTI touched its lowest point since September 2010. In the following months, crude values trekked higher to peak at over $114 per barrel in April. Since then both the economic outlook and crude futures have been on a roller coaster ride (most downward), analysts lament.

At the close of the Tuesday, Oct. 4, CME/NYMEX session, front month light sweet crude oil futures ended the day at $75.67 per barrel, a loss of $8.58 from the week earlier settlement at $84.25/bbl.

Brent crude ended the day at $99.84/bbl, shedding $6.91 compared to the week earlier settlement at $106.75/bbl. LLS (Light Louisiana Sweet) crude maintained a $26+/bbl premium to WTI on Tuesday.

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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