U.S. Base Oil Price Report


A few U.S. base oil suppliers have embarked on efforts to reduce inventories ahead of the years end, with some resorting to lowering spot prices to entice buyers, and others shipping cargoes overseas at competitive levels.

There were reports that several U.S. base oil parcels would be heading to India over the next few weeks, with a couple of them expected to reach Indian ports this week. Indian market participants said that some of the cargoes had been agreed at close to cost because a couple of U.S. producers were eager to place their material as the domestic market was slightly oversupplied.

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There has also been buying interest from Mexican buyers for API Group I mid-vis and SN500-600 cuts, but surprisingly, not much appetite for bright stock, sources said.

A Group II cargo was also heard to have been discussed for shipment from the USG to Colombia.

In the domestic market, there was talk about competitive pricing activity going on, with some spot transactions taking place at substantial discounts off of posted prices.

At the well-attended Independent Lubricant Manufacturers Association Annual Meeting in San Antonio, Texas, last week, base oil buyers were heard to be shopping for lower prices. It would not be surprising if their quest were successful, sources said, as demand typically slows down at this time of the year, and suppliers appear more willing to acquiesce to buyers price expectations.

Sources said that some Group II low-vis material was available at around $3.00/gal FOB USG, and that low prices for other cuts were also discussed. The trend seems to be that some Group II low-vis grade prices are slowly aligning themselves with those for Group I cuts, according to sources.

Nevertheless, there were some producers who stood firm by their price indications given that their stocks were at manageable levels. Furthermore, despite a recent softening of crude oil and feedstock prices, base oils margins remained thin, which precluded the granting of hefty decreases, participants added.

On the naphthenic front, there was not much pricing activity reported, with numbers remaining on firm footing on healthy demand and balanced inventories.

In production, Calumet restarted the catalytic dewaxing unit at its 7,000 barrels-per-day Shreveport, La., Group II plant on Oct. 11, following a planned turnaround that lasted approximately two weeks. The turnaround mainly affected production of the companys 80, 100 and 150 cuts. The unit is currently running well and product deliveries have been proceeding as scheduled, a company source said.

Motiva was heard to be planning to complete a 40-day turnaround at its 40,300 bbl/d Group II plant at Port Arthur, Texas, in January/February of next year, market sources said.

In other production news, there is increasing talk that Chevron will start up its new Group II plant in Pascagoula, Miss., in January 2014, with material expected to enter the market in March or April. The producer expects mechanical completion of the unit by the end of the year. Some sources said that Chevron wanted to ensure the start-up was done under the highest possible level of safety to prevent any incidents like the one that forced its Richmond, Calif., refinery to remain off-line for several months last year.

Upstream, West Texas Intermediate crude futures slipped as U.S. lawmakers continued negotiations in hopes of reaching an agreement on the nations debt ceiling, while Western governments began talks with Iran about its nuclear program.

WTI settled on the CME/Nymex at $101.21 per barrel on Tuesday, Oct. 15, down $2.28 from last Tuesdays settlement at $103.49/bbl.

Brent crude was trading at around $109.96 per barrel late yesterday on the CME, down 20 cents from $110.16 a week ago.

LLS (Light Louisiana Sweet) was trading at a premium to WTI of around $2.50/bbl on Oct. 14, compared with $4/bbl on October 8.

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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