U.S. Base Oil Price Report


The U.S. base oil market awoke on Tuesday to news that Motiva would be decreasing its API Group II prices, effective Oct. 1.

Motiva will be reducing its Star 4 (110 viscosity) grade by 15 cents per gallon, its Star 6 (220 vis) cut by 25 cents/gal, and its Star 12 (600 vis) oil by 45 cents/gal. The resulting prices are reflected in the table below.

The reductions were thought to be driven by abundant supply and competitive price activity among Group II producers, following the introduction of additional capacity from the Chevron plant in Pascagoula, Miss.

The price movement was not completely unexpected given current market conditions and expectations of a slowdown in demand during the last quarter of the year, which historically has triggered downward price adjustments.

Nevertheless, some market players thought that the decrease had come earlier than anticipated, and wondered whether further revisions would take place before the end of the year.

It was not clear whether other producers were planning to follow Motivas lead. However, buyers said that it was very likely that others – including Group I and possibly Group II+/III suppliers – would consider price revisions. One source said that the question was not if prices would be adjusted, but when they would see a revision.

A few sources also commented it was strange that Motiva had slashed the price of the heavy viscosity cut by 45 cents/gal, given that the heavy-vis grades had remained tight since the beginning of the year and prices had been fairly firm.

The 600 cut is finally coming down to reality, one source said, while another explained that demand for these oils had declined and inventories had started to build over the last few weeks. When prices are under downward pressure, the source added, buyers just stop buying because they do not want to be caught with high-priced inventories.

This generally happens at the end of every year, but this time, the process started earlier because of Pascagoula, another participant commented.

As far as the situation in the Group I and III segments was concerned, domestic requirements were on target with predictions, although buying appetite for Group I exports has weakened.

There was little fresh news on the naphthenic front, with a majority of suppliers reporting steady demand and little price variation, following recent downward adjustments of 10 cents/gal.

Upstream, West Texas Intermediate crude futures experienced the biggest quarterly decline in more than two years on expectations that domestic supplies have mounted, offsetting the risk of disruption from conflict in the Middle East.

WTI settled on the CME/Nymex at $91.16 per barrel on Sept. 30, down 40 cents/bbl from a settlement at $91.56/bbl on Sept. 23.

Brent crude was trading around $94.67 per barrel on the CME on Sept. 30, down $2.30/bbl from $96.97/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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