U.S. Base Oil Price Report


Completing a full round of paraffinic posted price increases, Flint Hills Resources raised its API Group II postings by 22 cents to 30 cents per gallon this week.

Effective Monday, April 16, Flint Hills Resources hoisted its 70HC and 75HC grades by 30 cents/gal. The company pulled up its 100HC by 23 cents/gal, 230HC by 22 cents/gal and 600HC by 24 cents/gal.

Naphthenic and Group I producers were the first to step out with higher prices during March. It took another several weeks, but the gates finally opened and Group II and III producers came out with posting revisions, concluding with FHRs move this week.

The driving force behind all these increases has been operating costs that have risen steadily since January. Sources noted that demand also improved from mid-March to mid-April, while overall inventories began to snug up, which helped to push postings higher.

Despite base oils prices rising across the board in the past month-plus, it remains difficult to assess whether or not these increases have offset the sting of stiff operating costs that producers have endured this year. Some players believe if demand continues to shine there could be another attempt by producers to lift postings. However, other participants speculate that these recent increases – although firm – could be the last price moves for a while, unless upstream conditions change radically. For now, it appears that supply/demand fundamentals are nicely aligned and stock positions are also largely balanced to tight.

Meanwhile, vacuum gas oil values remain strong, according to oil analysts. Early this week, low sulfur VGO was pulling in a premium of $32.5 to $34 per barrel over WTI. Medium and high sulfur VGO differentials were slightly less, around $29 to $32/bbl over WTI.

So far in April, crude oil values have been running about $2 to $3/bbl below those seen during much of March. Analysts now suspect that another upward swing could be just ahead as the economic outlook appears a bit more sturdy in America. Even in Europe, a rosier picture has been detected this week as
investor sentiment unexpectedly rose for a fifth straight month in Germany, and more cash was raised from a bond sale in Spain than had been expected.

At the close of the Tuesday, April 17, CME/Nymex session, front month light sweet crude oil futures ended the day at $104.20 per barrel, up $3.18/bbl from last weeks settlement at $101.02.

Brent crude was trading at $118.75 /bbl at the end of the day yesterday, slipping $1.19 /bbl from its week-ago level at $119.94. LLS (Light Louisiana Sweet) crude was trading at a premium of about $18.10/bbl 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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