U.S. Base Oil Price Report


This week Phillips 66, SK, HollyFrontier, Flint Hills Resources, and Ergon joined the current round of producers initiating price increases for U.S. base oils. Calumet, which raised API Group II postings last week, upped its Group I postings this week.

Phillips 66 announced that it would increase its Group II, II+ and III prices by 10 cents/gallon across the board, effective Aug. 16.

Also within the Group II+/III segment, SK announced a similar increase of 10 cents/gal, bringing its Yubase 3 cut to$5.16/gal, Yubase 4 and 6 to$5.46/gal, andYubase 8 to $5.44/gal, effective Aug. 19.

HollyFrontier will be raising its Group I prices by 7 cents/gal on the light to mid-vis cuts (SN 70 through 250), and 15 cents/gal on its heavy cuts (SN 500 and bright stock), effective Aug. 23.

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Flint Hills will be seeking an increase of 5 to 10 cents/gal for its Group II oils, with its heavy-vis 600 cut seeing the smaller increase. The producers 70/75HC material moved up to $3.63/gal, 100HC to$3.63/gal, 230HC to $3.95/gal, and 600HC to$4.52/gal, with an effective date of Aug. 20.

Calumet will increase its Group I SN 700 and bright stock by 15 cents/gal, effective Aug. 21. With this move, Calumet completes a round of increases on all of its base stocks, as the producers naphthenics and Group II oils had already been adjusted in previous weeks.

On the naphthenics side, Ergon’s 15 to 20 cents/gal increase on its naphthenic base oils will become effective on Aug. 23. The amount of the adjustment will vary, depending on the viscosity grade of the product.

San Joaquin increased its pale oil prices by 20 cents/gal across the board on Aug. 2, and Nynas also lifted values on Aug. 1, but further details are not forthcoming.

Chevron, Motiva, Calumet, ExxonMobil and Paulsboro Refining all previouslyrevised prices up by 10 cents/gal to 25 cents/gal, depending on the producer and the grade, with implementation dates ranging between July 26 and today, Aug. 21.

In other news, a fire Saturday at Motivas Port Arthur, Texas, refinery has caused shutdowns and reductions at the plant, but a Motiva base oil spokesperson informed Lube Report that the impacted processing area was related to fuels operations and was not associated with base oil operations. The fire has zero impact on Motivas base oil operations and production, he said.

The current round of price increase initiatives were spurred by rising crude oil and feedstock costs, pressured margins and a balanced-to-tight supply/demand ratio for a majority of base stocks.

A majority of suppliers said that fairly stable market conditions and unchanged pricing over the past several months had offered additional incentive for the increases.

Participants expected fundamentals to remain largely steady, although a couple of producers acknowledged that the announced increases had inhibited orders somewhat, particularly on the export front, but they remained optimistic that September requirements would pick up steam again.

Other suppliers were concerned that September would bring about a softening of demand as it is typically a slower month for base oil purchases. These manufacturers explained that there are still retail fall promotions taking place during that month, but that most of the product was probably already lifted in August.

Furthermore, for some companies, Sept. 30 marks the end of the fiscal year and these entities try to minimize inventories ahead of the deadline. Another factor to be considered is that, as the official Nov. 30 end of the U.S. hurricane season draws closer, buyers may be less eager to purchase more buffer stocks.

Upstream, WTI (West Texas Intermediate) crude futures slipped for a second day amid concerns about the Federal Reserves future policies, as there is speculation it will reduce bond purchases next month.

WTI settled on the CME/Nymex at $104.96 per barrel on Tuesday, Aug. 20, down $1.87 from last Tuesdays settlement at $106.83/bbl.

Brent crude was trading around $109.99 per barrel late yesterday on the CME, up slightly from $109.82 a week ago.

LLS (Light Louisiana Sweet) crude weakened to a one-month low against WTI last week as shipping capacity to the U.S. Gulf Coast increased, Bloomberg reported. LLS was trading at a premium to WTI of $4.80/bbl on Aug. 19, compared with $6.35/bbl on Aug. 12.

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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