U.S. Base Oil Price Report

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Following the barrage of paraffinic posting decreases presented since early November, naphthenic producers took their turn in the spotlight this past week, with all but one announcing that they would lower pale oil prices.

Ergon led the pack in reducing naphthenic base stock prices. The refiner said it cut 21 cents per gallon from its lineup of pale oils on Friday, Nov. 16.

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Closely following, Cross Oil said it chopped 21 cents/gal from its base and process oils on Monday, Nov. 19.

San Joaquin Refining also announced Monday, Nov. 19 was the effective date to lower its pale oils by 20 cents/gal.

Calumet said it pushed its pale oils down by 21 cents/gal today, Nov 21.

Nynas said it would not announce a price move at this time. The company did not raise prices in early October when other producers did.

With this round of price cuts, sources say that activity is being conducted within a wide range of prices, circa $3.30 to $4 per gallon, for 40 pale oil to 1200 pale oil. As noted previously, there are situations where price ideas may be slightly lower or slightly higher, depending on volume and end-use application.

The only facility that is currently in a planned turnaround is HollyFrontiers site in Tulsa, Okla. The 9,500 barrel per day API Group I plant was taken off line for routine maintenance at the start of this month and is expected to resume normal operations by late November to early December.

A number of sources have indicated that base oil producers, in efforts to keep supply/demand fundamentals in better balance, are most likely operating their facilities at reduced rates. This would not be out of the ordinary, one key market player said, as heading into year-end is usually when business slows and inventories build. In recent years, when fourth-quarter demand has not been as dynamic as in the past, producers have throttled back rates to prevent a buildup in stocks.

Meanwhile, just following this round of both paraffinic and naphthenic price reductions, crude values crept higher in the past week and touched over the $89 per barrel mark, although they retreated on Tuesday. Values for low-sulfur vacuum gas oil were steep, at a premium of $27 to $28 per barrel to benchmark West Texas Intermediate.

At the close of the Tuesday, Nov. 20, CME/Nymex session, front month light sweet crude oil futures ended the day at $86.75/barrel, a small gain of $1.37/bbl from last weeks settlement at $85.38.

Brent crude was trading at $109.98/bbl at the end of the day yesterday, gaining $1.79/bbl from its week-ago level of $108.19. LLS (Light Louisiana Sweet) crude was trading at a premium of about $24/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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