U.S. Base Oil Price Report


Following several price reduction announcements last week, a barrage of other price notices tallying between minus 10 to 40 cents per gallon swept through the market this week impacting both paraffinic and naphthenic base stocks.

As recently as two months ago, posted prices from base oil producers were on the rise. 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 the week of April 16, when Group II and III producers came out with posting revisions.

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

More recently, had crude oil values not fallen so severely over the past four to five weeks, several suppliers said that the market could have seen increased prices due to tight supply/demand conditions.

The downturn in prices began a week ago, when several API Group I and Group ll producers announced decreases, which have already taken effect.

Group I changes
ExxonMobil told its customers that it reduced its API Group I postings by 13 cents/gal for its 100 vis, and decreased solvent neutrals 150, 330 and 600 by 15 cents/gal. The refiner also dropped bright stock by 15 cents/gal. Direct buyers said that these price cuts were effective on Monday, June 11.

Other price movements within the Group I category included Calumet and Paulsboro Refining, thus wrapping up a complete round of Group I posting decreases.

Calumet said it lowered its Group I 700 vis by 25 cents/gal and bright stock by 40 cents/gal on Tuesday, June 12.

Paulsboro said it will adjust its Group I grades downward on Thursday, June 14. The East Coast refiner will drop 100 vis by 13 cents/gal, while grades 165, 500, 700 and bright stock will shed 15 cents/gal.

Group II/III Changes
A number of price decrease announcements also were issued this week in the Group II/II+ and III categories.

Calumet decreased its lineup of Group II grades (80, 100, 150 and 325) by 25 cents/gal on Tuesday, June 12.

Direct consumers of ExxonMobil confirmed that the giant dropped its Group II+ grades by 25 cents/gal for EHC 45 (110 vis) and pushed down EHC 60 (190 vis) by 27 cents/gal effective today Wednesday, June 13.

Phillips 66 stepped out with downward adjustments of 20 to 25 cents/gal. The Houston-based major lowered its 70 and 80 vis cuts by 22 cents/gal, 110 and 225 by 25 cents/gal and knocked off 20 cents/gal from 600 vis, effective Wednesday June 13.

Phillips 66 also said that Ultra S Group II+ 2 cSt, 3 cSt and Group III 4 cSt and 8 cSt premium base stocks were lowered by 25 cents/gal today, June 13. Phillips 66 markets S-Oils Ultra-S base stocks in North America.

West Coast refiner Chevron also alerted its customers that it will join other Group II producers and lower its lineup between 20 and 27 cents/gal on Friday, June 15. The company will push down 100 vis by 25 cents/gal, drop 220 vis by 27 cents/gal and chop 20 cents/gal off 600 vis.

Sources close to these companies said they expect both Motiva and SK to make price revision announcements later in the week.

Pale Oils
On the naphthenic front, Cross Oil, Calumet and San Joaquin Refining joined in by announcing lower prices as well, with reductions in the region of 10 to 30 cents/gal.

Cross Oil said it pushed its lineup of pale oils down today. The company did not describe the specific amounts but said the price cuts are in tandem with competition.

Calumet said it would lower all its naphthenic pale oils by 25 cents across the board, effective Thursday. June 14.

On Thursday, June 14, San Joaquin Refining also plans to adjust its pale oils between 10 cents/gal and 30 cents/gal, depending on grade.

Nynas said that it was still contemplating its price cut plans and has not made a formal decision as of this print.

In all cases of lower prices for paraffinic and naphthenic, sources pointed to lower feedstock costs as the prime culprit leading to these reductions. In some cases, slightly relaxed demand was also attributed as a driver to lower prices. There are some exceptions whereby demand continues at a healthy pace for certain grades while inventories are also deemed low.

Motiva Unit in Start-Up Mode
Meanwhile, the lubes hydrocracker unit that fell prey to disruption from the May 12 fire at Motiva’s Port Arthur complex, is now in start-up mode, according to sources. It was unclear, however, if the 50 percent sales allocation on Star 6 product was still being enforced by Motiva. The refiner also continues to prepare inventory positions in advance of a planned shutdown to commence early July.

Although not impacting base oils business, it was understood that the recently completed expansion at the Motiva Port Arthur, Texas, refining complex (adding 325,000 barrels per day, bringing it up to 600,000 bbls/day refining capacity) has encountered a number of operating issues. The company celebrated the completion of a five-year long project on May 31, but while in start-up mode, a series of operational problems ensued in the new crude unit, thus having to bring it to a halt on Monday, June 11, according to industry sources. Players from the crude oil arena have suggested that this unfortunate disruption could cause the new crude unit to be out of commission for up to several months.

At the close of the Tuesday, June 12, CME/Nymex session, front month light sweet crude oil futures ended the day at $83.32 per barrel, a loss of 97 cents/bbl from last weeks settlement at $84.29.

Brent Crude was trading at $97.06/bbl at the end of the day yesterday, down $1.65/bbl from its week-ago level at $98.73. LLS (Light Louisiana Sweet) crude was trading at a premium of about $11.75 to 12.25/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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