In the Group II segment, Flint Hills Resources announced that it would decrease the price of its 70/75HC grade by 7 cents per gallon, its 100HC oil by 15 cents/gal, its 230HC oil by 20 cents/gal, and its 600HC oil by 25 cents/gal, with an effective date of August 18. The revised posted prices are shown in the table below.

Calumet also communicated to its customers that it would be lowering prices of its Group II 80-100-150 oils by 10 cents/gal, and its 325 grade by 15 cents/gal, effective August 20.

Given that Motiva and Phillips 66 had already come out with decreases ranging between 8 and 25 cents/gal – depending on the cut and the producer – the only Group II supplier still missing in action was Chevron.

Interestingly, many saw Chevrons introduction of additional capacity from its new plant in Pascagoula, Mississippi, as the driving force behind the decreases. While it is true that base oil demand often dwindles in the fall, and it is not uncommon for suppliers to adjust prices down to encourage orders, the price cuts came earlier than usual this year, and many attributed this to the excess in supply.

Many participants confided that competitive activity had already been taking place in the spot market because of a looming oversupply situation, and that they had expected posted price adjustments.

Meanwhile, the Group I and Group II+ segments succumbed to the same downward pressure prevalent in the Group II sector. HollyFrontier was the first Group I producer to move, informing its customers that it would reduce the price of all its shipments made on or after August 18. The companys solvent neutral 70, SN100 and SN150 grades were lowered by 12 cents/gal, its SN250 to SN525 oils by 25 cents/gal, and its 150 bright stock by 10 cents/gal.

Market sources said that ExxonMobil will be adjusting its Group I prices downward on August 22, with the exception of bright stock, which will remain intact. According to sources, the companys SN100 and SN150 cuts will be lowered 16 cents/gal; its SN300 will move down by 24 cents/gal; and its SN500/600 grade by 31 cents/gal.

Similarly, Paulsboro will be dropping its low-viscosity grades by 16 cents/gal and its heavy-vis cuts by 31 cents/gal, but with an effective date of August 27. The producers bright stock price will not be revised.

Calumet will announce its intentions on Group I base stocks later this week.

The weakening of crude oil and feedstock prices in recent weeks has allowed producers to improve margins slightly, which probably supported their decisions to lower pricing.

Competition between the Group I and Group II grades had been ongoing as well, with the price spread between the two almost disappearing. Consumers can often utilize Group II cuts in Group I applications if prices are comparable.

Within the Group II+ segment, sources said that ExxonMobil would be reducing its prices by 10 cents/gal. No communications were received regarding possible adjustments by SK and Phillips 66.

Likewise, there were no revisions for SKs and Phillips 66s Group III postings.

Little fresh news emerged from the naphthenics segment, with suppliers hoping to maintain prices until at least the end of the year if conditions of the past couple months continue.

Upstream, West Texas Intermediate crude futures fell to a seven-month low as investors sold September positions, which are due to expire on August 20, and secured lower-priced futures.

WTI was trading on the CME/Nymex at $94.48 per barrel on August 19, down $2.89/bbl from a settlement at $97.37/bbl on August 12.

Brent crude was trading around $101.61 per barrel on the CME, down $1.41 from $103.02/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.