U.S. Base Oil Price Report


HollyFrontier and Calumet both stepped out during the past week to announce they would lift their API Group I base stock postings by 15 cents per gallon. With these notices, the Group I arena wraps up a full round of adjustments. The jury is still out on whether Group II and III producers would jump on board and push up posted prices.

HollyFrontier said that it increased postings for its lineup of Group I solvent neutrals by 15 cents/gal effective Monday, Sept. 17. Rising operating costs alongside a fairly healthy demand and balanced inventory positions were the drivers behind stiffer posted prices, sources suggested.

Calumet Specialty Products followed suit with other Group I producers, and lifted its solvent neutral 700 and bright stock posted prices by 15 cents/gal, effective today, Sept. 19. The reasoning behind higher prices were as mentioned above, according to sources, who indicated that steeper operating costs was the key culprit in driving prices up.

The question remains whether Group II and III suppliers will venture out and issue price hikes, but so far only the Group I category has seen recent price activity.

A handful of players sense that naphthenic and Group II/III prices could be raised in the coming week or two, particularly with crude staying up in the high $90s per barrel and with overall demand deemed satisfactory. Also, it was understood that European prices for a spate of base oils have been firming in recent weeks.

Supply sources note that base oil prices are presently firm and spot offers are no longer competitive. As well, buyers do not expect steep discounts given the pressure of rising upstream crude oil and operating costs. Suppliers also point out that demand is steady, but not exceptionally buoyant thus keeping posted prices unchanged in the Group II and III categories.

Naphthenic prices are more likely to move ahead of premium paraffinic prices, some sources speculated. They went on to say that in some cases, producers have a greater sensitivity to rising upstream costs, which could motivate pale oil suppliers to issue increases.

Meanwhile, oil futures gathered downward pressure this week on news that President Obama may tap the Strategic Petroleum Reserve, a time-honored method of flooding the market with supply to drive down prices. While the Obama administration resorted to these means in June of 2011, they say there’s no planned announcement coming, but all options are on the table. Future oil values slipped almost $5/bbl since Friday.

At the close of the Tuesday, Sept. 18, CME/Nymex session, front month light sweet crude oil futures ended at $95.29/barrel, shedding $1.88/bbl from last weeks settlement at $97.17.

Brent Crude was trading at $112.03/bbl at the end of the day yesterday, down $3.25/bbl from its week-ago level of $115.28. LLS (Light Louisiana Sweet) crude was trading at a premium of about $19.30/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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