U.S. Base Oil Price Report


Just as the rumblings about the latest price increase initiatives for U.S. base oils had started to quiet down, Motiva stepped out with a 10 to 15 cents/gallon price hike, effective Thursday, Aug. 8.

The producers Star 4 and Star 12 cuts will be moving up by 10 cents/gal, while Star 6 will be lifted by 15 cents/gal, sources said.

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A number of other producers including Chevron, Calumet and Cross Oil had recently indicated that they would seek price hikes on the back of rising feedstock costs and healthy supply/demand conditions. The 15 to 25 cents/gal increases, which varied depending on the producer and the product, went into effect between July 26 and August 1.

Posted naphthenic prices had not undergone any revisions for almost eight months, and healthy market conditions, together with the most recent increases in crude oil prices, was the push producers needed to pursue a margin improvement.

The announced increases seem to have provided a boost for more orders to be placed ahead of possible further increases from other producers, sellers commented. Despite the pick-up in buying appetite, the light vis grades are still slightly oversupplied, while the heavy vis cuts are enjoying a more balanced supply/demand scenario. Activity in the API Group III segment was said to be surprisingly steady, considering that summer is usually the time when requirements decline.

On the naphthenic front, suppliers also expect strong demand in coming weeks, with a couple of suppliers reporting sold-out conditions for pale 60 and transformer oil through August. There have also been export inquiries noted, but no fresh transactions were heard as concluded, possibly due to the gap between buying and selling indications.

The paraffinic cuts are also eliciting interest from the export side, with some demand for the heavy vis grades heard in Mexico, a supplier said. In contrast, the light grades are easily available South of the Border at very attractive prices. Petroleos Mexicanos was heard to be slightly long on SN100, and U.S. suppliers are unable to compete with the producers offers, sources added.

There has also been some interest for U.S. product emerging from South America. Brazilian buyers were heard to be checking market prices for U.S. imports, particularly in the Group I segment, but no specific deals were mentioned in connection with these inquiries.

In other market news, July U.S. automobile sales jumped by about 15 percent from the same month last year, with three of the worlds largest automakers registering their best July in seven years. At the same, market analysts warned that about 3.27 million new cars are still waiting for an owner at dealerships all around the country, compared with 2.7 million vehicles at this time last year, and the arrival of the new 2014 models is just around the corner in September, a report in Automotive News showed.

Upstream, WTI (West Texas Intermediate) crude reversed its two-day downtrend on the back of better-than-expected economic data in Europe and estimates that U.S. crude inventories may have dropped to their lowest levels since January.

WTI settled on the CME/Nymex at $105.30 per barrel on Tuesday, Aug. 6, up $2.22/bbl from last weeks settlement at $103.08/bbl.

Brent for September delivery settled at $108.18/bbl on the London-based ICE Futures Europe exchange, up $1.27/bbl from $106.91/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium to WTI of $5.05/bbl on Aug. 6, compared with $5.80/bbl on July 29.

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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