U.S. Base Oil Price Report


News of posted price decreases poured through the U.S. base oil marketplace this week. First out of the chute with a price notification was ExxonMobil, but other API Group I producers including HollyFrontier, Paulsboro Refining and Calumet quickly followed suit. All these suppliers announced reductions of between 10 cents and 15 cents per gallon. Sources indicated that the adjustments were not surprising, as downward pressure had gained momentum over the past several weeks due to waning demand for these grades.

Direct customers of ExxonMobil said that the major lowered its Group I postings on Monday, Oct. 24. Solvent neutrals 100, 150 and 330 were dropped by 10 cents/gal and 600 neutral and bright stock by 15 cents/gal.

HollyFrontier said it lowered its 70, 100, 148 and 250 solvent neutrals by 10 cents/gal while the company pushed its 525 vis and bright stock grades lower by 15 cents/gal. The adjusted postings were effective this past Monday, Oct. 24. (Note: HollyFrontier re-posted its SN 525 price on Sept. 28 at a revised starting figure of $5.07 per gallon. The company had pulled the posting temporarily in mid-August. The Lube Report price tables have been updated for price history purposes.)

Paulsboro Refining will reduce its posting effective Thursday, Oct. 27. The company plans to decrease 100 and 165 solvent neutrals by 10 cents/gal, while chopping 15 cents/gal from its 500 vis, 700 vis and bright stock.

Also on Thursday, Oct. 27, Calumet will decrease its Group I 700 and bright stock cuts by 15 cents/gal.

Customers speculated that Group I producers trimmed their U.S. prices because of lower average feedstock costs during the past month and continued improved inventory positions on the production side. These thoughts echoed those noted just over a month ago, when these suppliers previously moved Group I postings down by 10 cents to 20 cents/gal.

Despite these viewpoints, suppliers maintain that there remains a consistent level of fairly healthy demand for a number of grades within the Group I category. Admittedly however, suppliers also acknowledge that demand for Group II and Group III premium cuts is more robust in comparison.

Meanwhile, and in spite of West Texas Intermediate crude values having been down in the high $70s per barrel in late September and early October, crude futures sprung higher on Tuesday to over $93/bbl, their best level since early August. Brent futures were more-or-less sideways this week, shedding about a dollar.

One industry expert was heard saying that the spreads between the two global benchmark crudes – WTI and Brent – had been too high and uncalled for in any case, and the growing doubts about Europes debt-crisis summit may have contributed to pressure on Brent.

The price difference between the two benchmarks had set records in recent months, with Brent, historically cheaper, outpacing the Nymex oil. Analysts agree that the latter represented a bargain for the past three months or so, but most recently, traders have decided to recognize its value.

At the close of Tuesdays Oct. 25, CME/Nymex session, front month light sweet crude oil futures ended the day at $93.17 per barrel, a gain of $4.83 from the week-earlier settlement at $88.34.

Brent crude ended the day at $111.01/bbl, losing 86 cents compared to its week-ago settlement at $111.87/bbl. LLS (Light Louisiana Sweet) crude was around a $21.25/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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