The Labor Day holiday offered a brief respite to U.S. base oil market players following several busy weeks of price adjustments, although pricing activity picked up again with Calumet communicating that it would reduce prices on its naphthenic oils as of Sept. 5.
Calumet will be lowering its pale oils by 10 cents per gallon across the board, tracking closely the recent price adjustments carried out by Ergon and Cross Oil. Ergons 10-cent/gal decrease became effective on Aug. 29, while Cross Oil communicated that it would undertake a similar price revision with an effective date of Sept. 3.
The decreases were largely attributed to an easing in crude oil prices, together with the imminent start of the fall season, when activity in the base oils market tends to slow down and producers begin to monitor inventories to finish the year with reasonable stock levels.
Nevertheless, some participants pointed out that there is typically a short spurt of brisk activity in the fall, when blenders conclude base oil purchases to prepare inventories and cover product needs for the remainder of the year. Demand usually declines after these requirements have been fulfilled.
On the paraffinic front, the round of price adjustments seen over the last few weeks appears to have come to a conclusion with the new prices posted by Chevron. Chevron eliminated its U.S. West Coast posted prices and replaced them with U.S. Gulf Coast postings.
This followed a busy round of price decreases from paraffinic base oil producers, which started in mid-August and resulted in a diverse landscape of price adjustments, depending on the grade and the producer.
In the API Group I segment, prices were reduced between 10 cents/gal and 31 cents/gal.
Posted Group II prices were revised down between 7 cents/gal and 25 cents/gal.
The Group II+ oils underwent reductions of 8 cents/gal to 12 cents/gal, and prices of Group III products fell by 12 cents/gal.
Upstream, West Texas Intermediate crude futures weakened on concerns that oil demand would slow down as the peak driving season has come to an end, and this marks the start of the maintenance period at many refineries.
WTI settled on the CME/Nymex at $92.88 per barrel on Sept. 2, down 98 cents/bbl from a settlement at $93.86/bbl on Aug. 26.
Brent crude was trading around $100.34 per barrel on the CME, down $2.31/bbl from $102.65/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.