U.S. Base Oil Price Report


Within the past week Ergon, Cross Oil and Calumet entered the market with news of pale oil price increases. The hikes range from 20 cents per gallon to 25 cents per gallon and cover all their naphthenic base oils. The bump-up in prices was directly linked to rising upstream costs and tight availability, which were largely driven by crude at $91-plus per barrel, sources said.

Ergon will bump up its line-up of pale oils by 25 cents/gal on light vis and heavy vis grades, while mid vis grades will raise by 20 cents/gal, effective Feb. 7.

Cross Oil told its customers that it will up all its naphthenic cuts by 25 cents per gallon on Feb. 9. Last week, the company advised its accounts that prices for two heavy-vis grades would go up by 10 cents/gal on Feb 1.

Calumet will increase prices effective Feb. 15. The company will add 25 cents per gallon to 750 vis and heavier. Lighter products than 750 will increase by 20 cents/gal.

San Joaquin and Nynas had yet to announce their formal plans, although market sources believe that there is no question these two refiners will follow. One source said that there were already noises from both SJR and Nynas that they would be hiking prices in the near term.

San Joaquin Refining, which is currently in a turnaround at its Bakersfield, Ca., location, expects to resume operations on Friday, Feb. 4. Once the plant is up, the company will have completed phase one of a two-part turnaround.

All naphthenic producers admit that overall availability is very scant. They add that pure spot trades for most grades are difficult to achieve, despite strong demand from offshore consumers who are even willing to pay a premium.

Sellers of both paraffinic and naphthenic base stocks are pleased to say that robust buying interest continues from contractual and regular-ongoing customers. In most cases, all requirements are being met in a timely manner, but there have been cases of delayed shipments. Orders for the coming month are said to be strong. Most suppliers contend that they are working on a hand-to-mouth basis to ensure customers their needs will be fulfilled.

Meanwhile, base oil suppliers continue to keep a close eye on upstream developments. Crude values bounced higher recently on news concerning political disruptions in Egypt, moving over the $92 per barrel mark.

During the recent strife in Egypt and with protesters demanding that Egyptian President Hosni Mubarak leave office, crude prices escalated, pushing Brent, a European benchmark contract crude, above $100/bbl.

One of the key concerns stemming from this turmoil was whether the Suez Canal, a major route for oil tankers, could close. The canal was operating normally on Tuesday amid the mounting protests, according to an official from the waterway.

Oil futures eased somewhat by late Tuesday afternoon. There are still split opinions among energy experts whether crude values will ascend higher to $100 per barrel or fall back to the $85 per barrel level.

Vacuum gas oil values have sustained a fairly sizeable premium to crude prices, around $11to $14 per barrel, for several weeks. In many cases, VGO is an essential feed stock, and therefore it is a key factor in the pricing of base oils.

At the close of the Tuesday, Feb. 1, NYMEX session, front month light sweet crude oil futures ended the day at $90.77 per barrel, a gain of $4.58 from the week earlier settlement at $86.19/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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