Phillips 66, Motiva and Chevron stepped out with price decrease announcements, helping to sustain a trend set in motion by Flint Hills a week earlier. Base oil market activity continues at a slow pace, despite the reductions being issued.
Phillips 66 dropped postings between 35 cents and 40 cents per gallon today, July 11. The Houston-based major lowered its 70 and 80 vis cuts by 35 cents/gal, 110 and 225 by 40 cents/gal and knocked off 35 cents/gal from 600 vis.
Phillips 66 also said it lowered Ultra-S Group II+ 2 cSt, 3 cSt and Group III 4 cSt and 8 cSt premium base stocks by 35 cents/gal today as well. Phillips 66 markets S-Oils Ultra-S base stocks in North America.
Motiva told customers that it planned to discount its posted prices on Thursday, July 12. The major is taking off 25 cents/gal on the Star 4 (110 vis) grade, chopping Star 6 (220 vis) by 30 cents/gal, and shaving off 45 cents/gal from Star 12 (600 vis).
West Coast refiner Chevron also told its customers that it will join other Group II producers and lower its line up between 35 cents and 45 cents/gal on Friday, July 13. The company will push down 100 vis by 45 cents/gal, chop220 vis by 38 cents/gal and knock off 35 cents/gal from the 600 vis posting.
Motiva will enter a planned turnaround at its Port Arthur, Texas, facility mid-week. The company will take one of its three trains down for routine maintenance. The unit should be offline for about 28 days, with full operations expected before mid-August.
It remains to be seen whether other producers will follow the current posted price cuts, but it is highly suspected that many will. The Group I sector may take another week or so to decide if prices will fall, while the Group III sector continues to be a more difficult study.
Why base oil prices are falling while crude oil values have been gaining upward momentum remains somewhat a mystery, sources expressed. They added that contract demand is decent, scheduled orders are moving as planned. But spot activity is very slow, sources lamented, reiterating that it is the dead of summer and spot trade is usually nonexistent during this period.
Some market observers believe that consumers’ stock positions are most likely full. They suspect that perhaps buyers are simply working on pushing down inventory levels, focused on using up higher-priced product before restocking with lower-priced base stocks.
It was also understood that European prices are slipping lower, with one large producer having announced $70 to $90 per metric ton decreases this week. Whether this will influence Group I postings in the U.S. market is unclear. However, a few sources said that if history repeats itself, then U.S. suppliers will issue reductions in the coming week or two.
At the close of the Tuesday, July 10, CME/Nymex session, front month light sweet crude oil futures ended the day at $83.91 per barrel, lower by $3.75 /bbl from last weeks settlement at $87.66.
Brent crude was trading at $97.83/bbl at the end of the day yesterday, easing by $2.67/bbl from its week-ago level at $100.50. LLS (Light Louisiana Sweet) crude was trading at a premium of about $13.7/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.