U.S. Base Oil Price Report


Naphthenic base oils producer Cross Oil joined two U.S. suppliers that had stepped out with price increases last week. Cross announced that it will lift its pale oil prices by 15 to 20 cents/gallon, depending on the products viscosity, effective Aug. 1.

Calumet was the first naphthenic producer to announce a price movement, increasing its prices by 15 cents/gal on July 30.

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On the paraffinic side, Chevron announced it was lifting its API Group II West Coast posted prices by 25 cents/gal, effective July 26.

The increases were mostly fueled by the recent jumps in crude oil and vacuum gas oil prices, sources said. Naphthenic base oil prices had not experienced any price fluctuations since November of last year, despite squeezed margins and robust off-take, as producers preferred to maintain stable pricing in order to preserve demand levels. However, suppliers agreed that it was time to adjust prices because margins were suffering considerably, following the increases in production costs.

Buyers are waiting to see if other suppliers follow the small group of producers that have announced price increases. A paraffinic producer said it was waiting to see if other major players would hike prices before announcing any adjustments of its own. Another supplier also admitted to having adopted a wait-and-see position. A number of producers were hesitant about following Chevrons lead, as they thought the upward crude oil price trend would be short-lived.

In the meantime, base oil demand remained fairly steady, despite the slowdown that typically infects the market during the summer months. Suppliers acknowledged that some cuts were showing more plentiful availability than others, but added that activity had actually picked up over the last couple of weeks as some buyers were hoping to beat possible price hikes.

A Group III supplier said orders had been stronger than predicted, and the market in general did not seem oversupplied, perhaps as a result of producers having cut back on base oil output to produce more transportation fuels during the peak demand season for these products.

Upstream, WTI (West Texas Intermediate) crude dipped to the lowest level in three weeks, ahead of a government report that was anticipated to reflect that U.S. economic growth had slowed in the second quarter. WTI settled on the CME/Nymex at $103.08 per barrel on Tuesday, July 30, down $4.15/bbl from last weeks settlement at $107.23/bbl.

Brent for September delivery settled at $106.91/bbl on the London-based ICE Futures Europe exchange, down $1.51/bbl from $108.42/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium to WTI of $5.80/bbl on July 29, compared with $5.75/bbl on July 19.

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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