U.S. Base Oil Price Report


Several developments took place this week. Phillips 66, SK, and Calumet joined the caravan of paraffinic producers who have lowered posted prices. Chevron discontinued its West Coast posted prices and replaced them with Gulf Coast postings. And on the naphthenic front, Ergon was the first producer to communicate price revisions, followed closely by Cross Oil.

Phillips 66 had already revised its API Group II posted prices on Aug. 15, but this week, the producer announced that it had reduced the price of its Group II+ Ultra S2 and S3 cuts by 8 cents per gallon, and its Group III Ultra S4 and S8 by 12 cents/gal, as of Aug. 22.

Within the same market segment, SK will be moving all of its Group II+/III/III+ prices down 12 cents/gal, effective Aug. 27.

In the Group I sector, Calumet will lower its 600 cut by 30 cents/gal, effective Aug. 27. The producer will not be changing its bright stock price given tight supply conditions.

Similarly, Paulsboro left its bright stock price unchanged, and the revised prices for the companys other Group I cuts will become effective this week. The producer said that it would decrease its low-viscosity grades by 16 cents/gal and its heavy-vis cuts by 31 cents/gal, effective Aug. 27.

Within the Group II segment, Chevron announced it would be eliminating its U.S. West Coast posted pricing, and would be replacing it with U.S. Gulf Coast posted prices. The U.S. Gulf Coast price for Chevrons 100R grade will be $3.35/gal, its 220R grade will be $3.65/gal and its 600R grade will be $4.20/gal, all on an FOB basis, effective Aug. 26.

Chevrons new Pascagoula Base Oil Plant in Mississippi is operating and producing Group II base oils (for details from a commissioning event for the plant last week, please see the story in this issue of Lube Report), and there was no impact on the Richmond plant from the 6.0 magnitude earthquake that hit Northern California on Aug. 25, sources said.

The price decreases implemented this week complete the round of paraffinic base oil price reductions initiated by Motiva and Phillips 66 on Aug. 15.

While the decreases varied considerably depending on the producer and the specific cut, in general terms, Group I prices underwent reductions between 10 cents/gal and 31 cents/gal.

Group II prices were adjusted down between 7 cents/gal and 25 cents/gal.

In the Group II+ segment, the drops ranged 8 cents/gal to 12 cents/gal, and in the Group III category, prices fell 12 cents/gal.

Fresh developments emerged in the naphthenic base oils market this week. Ergon relayed that effective Aug. 29, prices for all of its naphthenic products would be revised down by 10 cents/gal.

Shortly after, Cross Oil communicated its intentions of adjusting prices down on Sept. 3.

Conditions had been fairly stable within the naphthenic segment, with demand well-balanced against supply, and most participants had been hoping this stability would be maintained through the end of the year. However, sources admitted that prices had been exposed to downward pressure because of the recent drop in crude oil prices.

Upstream, West Texas Intermediate crude futures were volatile, edging up as consumer confidence appeared to have improved in the U.S. An Energy Information Administration report was also expected to show that oil supplies have dropped. However, crude futures were down week-on-week.

WTI settled on the CME/Nymex at $93.86 per barrel on Aug. 26, down 62 cents/bbl from a settlement at $94.48/bbl on Aug. 19.

Brent crude was trading around $102.65 per barrel on the CME, up $1.04/bbl from $101.61/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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