U.S. Base Oil Price Report


Base oil activity remained fairly low-key for much of the past week, while posted prices held firm. However, a sudden uptick in demand emerged Monday once the market learned that an operational incident occurred at the Motiva Port Arthur refinery over the weekend, causing a temporary shutdown.

On Saturday morning, Motiva encountered a flange leak on a heater at the lube hydrocracker, which flared causing a fire. According to sources, the fire was quickly extinguished and there were no injuries or casualties reported during the plant disturbance. It was understood, however, that Motiva had to take the impaired unit offline temporarily while the problem is being rectified. As of Tuesday, sources did not know when operations would return to normal.

Several suppliers said they began receiving an uptick in calls early Monday from buyers who are seeking certain grades. In particular, the buyers are looking for either naphthenic light vis 60 pale oils or a specific paraffinic feedstock blend that can be used to make transformer oil. A few sources suggested that the upsurge in fresh orders could be related to the recent Motiva problems.

Meanwhile, Motiva has confirmed that it will enter a planned turnaround on one of its three lube trains at its Port Arthur, Texas facility in mid-July. Downtime is expected to last approximately 25 days.

Cross Oil said that its planned turnaround, which commenced late March, encountered a one-week delay. The plant is now expected to restart by end of this week. The company has low inventory positions and has not entertained any spot opportunities during the maintenance period.

Aside from planned and unplanned turnarounds, both paraffinic and naphthenic customers largely agree they have been receiving their contractual requirements, but on occasion during the past few months have had some trouble sourcing extra volumes (depending on grade and supplier). They added that in most cases, shipments for regular requirements have been on time, but some deliveries have been delayed.

The economic recovery remains on shaky ground in the United States. Stock markets have shed a considerable amount the first half of May, giving back big gains made the first of the year. Analysts point to the ongoing European financial crisis as the biggest influence causing investors to take their money and run in the wake of uncertainty. On the upside, the automotive industry saw strong growth during the first quarter and most recently the U.S. housing market revealed a strong confidence reading – the highest in five years.

At the close of the Tuesday, May 15, CME/Nymex session, front month light sweet crude oil futures ended the day at $93.98 per barrel, a loss of $3.03/bbl from last weeks settlement at $97.01.

Brent crude was trading at $112.30/bbl at the end of the day yesterday, slipping 61 cents/bbl from its week-ago level of $112.91 LLS (Light Louisiana Sweet) crude was trading at a premium of about $12.75/bbl to WTI (West Texas Intermediate) 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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