U.S. Base Oil Price Report


There was mixed conversation in the U.S. base oils arena this week, as players described price moves … in both directions. Phillips 66 increased four API Group II postings by 25 cents per gallon, and San Joaquin boosted pale oils prices. At the same time, its rumored that Group I is being discounted.

Phillips 66 said that it upped postings for its Group II 70N, 80N, 110N, 225N grades by 25 cents/gal, effective today, Feb. 13. The company did not adjust the 600N posting, which remained unchanged at $4.50/gal. Phillips 66 also did not initiate any change for its Ultra S Group II+ or III base stocks during this round. Phillips 66 is the exclusive marketer in North America for S-Oil.

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San Joaquin Refining alerted its customers that it had increased its lineup of naphthenic oils between 10 cents/gal and 30 cents/gal, depending on location. Higher prices were applied to all export activity, and to some domestic business, effective Monday, Feb. 11. The West Coast producer said that it increased prices due to recent market conditions including rising crude oil costs, improved economics of alternative markets, increased demand and reduced supply due to several industry shutdowns.

Meanwhile, chatter of possible posted price decreases for Group I base oils proved to be only rumors. It was believed, however, that what some market players had thought to be a drop in postings was indeed producers issuing temporary voluntary allowances (TVAs). Basically, according to sources, some direct customers of certain producers will receive varying TVAs (or discounts), depending on the starting point price, volumes purchased as well as destination.

Sellers and buyers alike discussed strained market fundamentals. With higher feedstock costs at hand, along with improved demand, posted prices are likely to move upward. Sources emphasized that since one major Group II producer has initiated a price hike, other producers will probably follow. Sources agreed though, that higher prices across the board are just speculation at present, as no other producer has yet to follow this week’s lead by Phillips 66.

Overall, suppliers said that demand is definitely on the rise. Customers are not only seeking already-scheduled volumes for February deliveries, but in some cases additional quantities of certain grades are needed. A good deal of buying interest was detected for light vis grades, but there was also fresh interest for mid and heavy vis cuts.

Market watchers are keeping a close eye on upstream developments. Vacuum gas oil values are up … way up, according to several refiners and traders. Low sulfur VGO was trading at a differential as high as $39/barrel over WTI. A premium of $35/bbl to $37/bbl over WTI was being applied for medium to high sulfur VGO. Brent crude futures have also escalated to over $118/bbl, while WTI was north of $97/bbl. VGO is an instrumental factor in the pricing for base oils.

At the close of the Tuesday, Feb.12, CME/Nymex session, front month light sweet crude oil futures ended the day at $97.51 per barrel, up 87 cents/bbl from last weeks settlement at $96.64. Brent Crude was trading at $118.52/bbl at the end of the day yesterday, up $1.94/bbl from its week-ago level of $116.58. LLS (Light Louisiana Sweet) crude was trading at a premium of $20.55/bbl to WTI on Tuesday.

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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