U.S. Base Oil Price Report


The U.S. base oils market settled back into its usual routine, following price reductions on both the naphthenic and paraffinic fronts.

Naphthenic oil suppliers revised prices down by 10 cents/gal, with effective dates ranging between Aug. 29 and Sept. 9.

On the paraffinic front, the disparate price revisions of 7 cents/gal to 31 cents/gal, which varied depending on the grade and the supplier, had led to a brief uptick in requirements in mid to late August, but orders have gone back to normal levels since then.

Despite the recent introduction of added capacity into the domestic supply system from Chevrons API Group II plant in Pascagoula, Miss. – which had been greeted with great concern by the rest of the suppliers because of a potential slump in demand – sources said that requirements had remained fairly steady.

One participant commented that the market was decently balanced thanks to several export shipments that have been concluded over the last few months.

Base oil prices did come down following the debut of the Chevron plant, but price adjustments are not uncommon at the end of the summer, and a drop in crude oil prices also contributed to the downward movement, sources explained.

Now that the first swell of additional product has hit the market, participants are preparing for the arrival of a second wave when the announced ExxonMobil Group II/II+ expansion in Baytown is completed, although the size of the expansion has not been disclosed.

There has been talk that the expanded unit would be brought on-stream before the end of the year and ahead of the originally announced date of 2015. Speculation was partly fueled by the fact that several cargoes of approximately 20,000 metric tons were shipped by the producer from its Singapore plant to the U.S. Gulf in recent months. Sources conjectured that this was a sign that the producer had imported material to cover the shortfall caused by work performed at the existing base oil plant during the expansion process.

However, other sources commented that the Singapore cargoes were possibly regular shipments of Group II oils for the companys Port Allen, La., lubricants plant, which manufactures automotive lubes for distribution throughout North America, South America, and the Caribbean.

The plant has a yearly throughput of 90 million gallons of finished lubricant and base stock, according to ExxonMobils website, and receives base oils mainly from the Baton Rouge refinery, but also from Baytown and Beaumont, as well as Singapore.

Another sign that the refiner is not very close to bringing material on stream yet is that it has not been actively marketing its added supply, sources explained.

Upstream, West Texas Intermediate crude futures fell slightly on Tuesday, having reached the highest closing price in more than a week, ahead of the Federal Reserves review of interest rates.

WTI settled on the CME/Nymex at $94.88 per barrel on Sept. 16, up $2.13 cents/bbl from a settlement at $92.75/bbl on Sept. 9.

Brent crude was trading around $96.65 per barrel on the CME on Sept. 15, down $2.51/bbl from $99.16/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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