U.S. Base Oil Price Report


The U.S. base oils market was hit by a wave of increases this week. Calumet, ExxonMobil and Paulsboro Refining followed hard on Motivas heels and announced posted price increases of their own.

Motiva had indicated last week that it would raise its Group II prices by 10 to 15 cents per gallon on Aug. 8. Calumets price initiative is similar to Motivas in that the producer plans to raise its API Group II 80N, 100N and 150N by 10 cents/gal, while its 325N cut will increase by 15 cents/gal, effective Aug. 15. The companys Group I postings will not see an increase at this time, but may be revised later.

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Sources said that ExxonMobil would lift its Group I and Group II+ cuts by 15 cents/gal with an effective date of Aug. 16.

Paulsboro Refining will similarly be increasing all of its Group I grades by 15 cents/gal as of Aug. 21.

Calumet had recently lifted its naphthenic oils by 15 cents/gal, effective July 30. Also on the naphthenic side, Cross Oil introduced an increase of 15 to 20 cents/gal, depending on the products viscosity, effective Aug. 1.

But the forerunner to all these initiatives had been Chevron, who announced a price increase of 25 cents/gal on its Group II West Coast postings, effective July 26.

However, market sources said that Chevrons increase had probably been too ambitious, and that consumers were resisting the hike. Sources suggested that the producer may be able to achieve similar increases to those proposed by the other producers, although some buyers remained adamant that there would be no support for any price increases.

The remaining suppliers have adopted a wait-and-see attitude and will likely make a decision about pricing in the coming days. All of the producers are feeling the pressure of climbing feedstock costs and shrinking margins, but not everyone enjoys the same supply/demand situation, sources said. While many suppliers report balanced-to-tight fundamentals, others are dealing with slightly oversupplied conditions, particularly in the light and mid-vis paraffinic segment.

While some suppliers characterized demand as steady, a couple of sellers said that the market had fallen into a summer slumber this week and orders had been slow, as many participants were on vacation and had enough stocks to run day-to-day operations. There were also comments that the rerefiners had ample inventories and were offering very competitive pricing.

A supplier was heard to have finalized some Group I business with a trader for a cargo going to Nigeria, but further details were not forthcoming. Buying interest from South America and Asia continues to be noted, but the gap between buying and selling ideas is difficult to bridge, sources said.

As the time of the start-up of Chevrons new Pascagoula base oil plant draws closer, participants expressed renewed concerns about an oversupplied market and softening prices. Sources expect the 25,000 barrels per day Group II unit to come on stream in October or November, and hoped that Chevron would export a large portion of the output.

Upstream, WTI (West Texas Intermediate) crude futures strengthened on predictions that U.S. stockpiles may have dropped and concern that political unrest in the Middle East will continue to affect the regions production and exports.

WTI settled on the CME/Nymex at $106.83 per barrel on Tuesday, Aug. 13, up $1.53/bbl from last Tuesdays settlement at $105.30/bbl.

Brent for September delivery settled at $109.82/bbl on the London-based ICE Futures Europe exchange, up $1.64/bbl from $108.18/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium to WTI of $6.35/bbl on Aug. 12, compared with $5.05/bbl on Aug. 6.

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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