U.S. Base Oil Price Report


Early this week, Motiva announced that it would be raising posted base oil prices on March 26, and Phillips 66 followed with an announcement of its own shortly after.

Motiva will increase its API Group II Star 4 cut (110N) by 8 cents per gallon, its Star 6 (220N) by 10 cents/gal and its Star 12 (600N) by 20 cents/gal. Motiva was also heard to have removed its 10 cents/gal temporary competitive allowance (TCA) on the Star 4 cut, effectively increasing the price by 18 cents/gal, sources said.

Phillips 66 will be lifting its Group II 70N and 80N cuts by 20 cents/gal, its 110N by 15 cents/gal, its 225N by 10 cents/gal and its 600N by 20 cents/gal.

The producer will also be revising its Group III postings up by 20 cents/gal for its Ultra-S 2 and 3 (centiStoke) products and by 15 cents/gal for its Ultra-S 4 and 8 (cSt).

The movements came as no surprise as there had been widespread expectations that a few suppliers would be following in Chevrons footsteps and announce posted price hikes before the end of the month. Chevron had raised its West Coast API Group II postings by 25 to 30 cents/gal earlier this month, with the revised prices becoming effective on March 5.

Market participants had anticipated other suppliers to follow suit mainly because historically, producers had lifted prices once base oil demand had started to pick up ahead of the spring season.

However, some questioned whether suppliers would be adhering to the same pattern this year, as circumstances are slightly atypical. The imminent introduction of fresh Group II capacity from the Chevron plant at Pascagoula, Miss., in May has turned producers very cautious in terms of adjusting prices. As one industry insider put it: The new Chevron plant still weighs on their decision.

Sources said that the low-viscosity grades from the new plant would be now available in May, rather than April as previously expected, and that the heavier cuts would hit the market in June.

Suppliers underscored that firm crude oil and feedstock vacuum gas oil prices over the last several months had resulted in very narrow margins and that a price revision was necessary.

A couple of producers who have not yet adjusted prices were heard to be mulling possible price hikes as well.

Demand for Group I and II heavy-viscosity grades has been robust, both on the domestic and export fronts, resulting in tightening supplies and strengthening spot prices.

A producer said its inventories were very snug and that traders were desperately looking for spot cargoes, but the supplier was unable to offer extra volumes beyond those needed to cover its contractual obligations. A second supplier also said it had stopped participating in the spot segment because of low stocks.

Aside from strong domestic requirements, some Group I heavy-vis cargoes have been sold to Mexico in recent weeks as well, according to sources.

Producers also continue to export Group II cargoes on a regular basis, particularly into India, although base oil activity in that country has slowed down ahead of the general elections scheduled to take place from April 7 until May 16.

Group I availability has also tightened on the back of a turnaround at Paulsboro Refinings 11,000 barrels per day base oil plant in New Jersey, which started on March 20 and was anticipated to span three weeks.

Calumet will also be idling its Shreveport, La., base oil plant from April 28 until mid-May for routine maintenance. Calumets Shreveport facility can produce 4,800 b/d of Group I base oil and 7,000 b/d of Group II cuts. The producers paraffinic base oil inventories remain low because the plant suffered some weather-related disruptions in January.

Tight market conditions were equally reported within the naphthenic segment, with San Joaquin and Calumet having just restarted their plants, following brief turnarounds earlier this month. Cross Oils 5,000 b/d naphthenic base oil plant in Smackover, Ark., will remain shut down for maintenance through the end of March.

Pale oil suppliers implemented increases in the realm of 15 to 20 cents/gal, depending on the product and the producer, in mid-March.

Upstream, West Texas Intermediate crude futures edged up because of ongoing concerns that the crisis between Western nations and Russia could escalate.

WTI settled on the CME/Nymex at $99.19 per barrel on March 25, down 51 cents from a settlement at $99.70/bbl on March 18.

Brent crude was trading around $106.99 per barrel on the CME, up 20 cents from $106.79/bbl a week ago.

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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