U.S. Base Oil Price Report


By Carolyn L. Green

Phillips 66 raised its API Group II+ and III postings, following the ExxonMobil Group II+ move of several weeks ago. It is the first change seen for Group III base oils in the current round.

Phillips 66, exclusive marketer in North America for S-Oil, announced that it increased posted prices for its Ultra S grades today, April 10, between 18 cents and 25 cents/gal. In the Group II+ sector, Phillips 66 pushed up the Ultra S2 and S3 cuts by 25 cents/gal. Group III base oil postings for Ultra 4 cSt and 8 cSt were hiked by 18 cents/gal.

A number of players were surprised to see higher prices for Group III, since the market appears to be over supplied with these high quality base oils. Nevertheless, once this news reached the market, many sources pointed out that all producers have been dealing with high operating costs much of this year.

Vacuum gas oil values remain at stiff premiums over WTI, this past week averaging around $27/bbl over WTI. VGO differentials/values are a key tool in the pricing of base oils. In March, VGO premiums averaged in the mid to high $30s/bbl over WTI.

Some buyers also pointed out that demand has picked up, and the over-supply situation for Group III oils is not as prevalent as seen earlier this year.

With the exception of SK Lubricants which has not jumped in the ring, Phillip 66s posted price move completes a round of price hikes that commenced in mid February.

Meanwhile, naphthenic prices have not undergone any officially announced moves, but sources have indicated that suppliers have bumped up offers on a regular basis in recent weeks. Overall availability of many pale oils is deemed tight, and demand has been spiking recently as well.

Naphthenic prices have been pegged at circa $3.55/gal to $3.70/gal for 100 to 750 vis cuts for general purpose applications. Pale 60 vis, used mostly to make transformer oil, is valued in the high $3s/gal and is also seeing exceptionally strong demand.

Heavy pale oil prices were at similar levels as transformer oil – high $3s/gal. Specialty oils and other niche applications are calling for premiums of anywhere from 50 cents/gal to $1/gal over general and main stream applications. Sources reiterated that naphthenic prices can range in a very large span and the variance is dependent on the end use.

It is understood that the Lyondell Houston Refining is now producing on-spec product, but the facility continues to operate at reduced rates of around 70 percent of capacity. This is greatly improved from much lower rates reported in early March, when the plant experienced some quality issues that resulted in the production of off-spec naphthenic 100 and 300 oils.

Although Calumet completed its Shreveport, La., paraffinic refinery turnaround several weeks ago, the company continues to play catch up on back orders for various grades. Shipments of most products are facing a two to four week delay, sources said. Calumet is hoping to be caught up by mid May.

At the close of the Tuesday, April 9, CME/Nymex session, front month light sweet crude oil futures ended the day at $94.20 per barrel, shedding $2.99/bbl from last weeks settlement at $97.19.

Brent Crude was trading at $106.05/bbl at the end of the day yesterday, dropping $4.64/bbl from its week-ago level of $110.70.

LLS (Light Louisiana Sweet) crude was trading at a premium of $14/bbl to WTI on Tuesday. This week’s LLS differential is the lowest premium seen this year. Analysts attribute this to the narrowing differential between WTI and Brent, which is the tightest seen in about 10 months.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other