U.S. Base Oil Price Report


Calumet, Flint Hills Resources, Chevron and HollyFrontier joined Motiva in the latest round of price adjustments applied to U.S. base oil postings this week.

Within the API Group II segment, Calumet communicated to its customers that it would lower the price of its Group II 80/100/150 grades by 15 cents per gallon, and its 325 cut by 25 cents/gal, with an effective date of Oct. 3.

Flint Hills Resources reduced its 70/75HC cut by 20 cents/gal, its 100HC grade by 15 cents/gal, its 230HC oil by 25 cents/gal, and its 600HC cut by 45 cents/gal on Oct. 6.

In a similar pattern, Chevron will decrease its 100 cut by 15 cents/gal, its 200 grade by 25 cents/gal, and its 600 oil by 45 cents/gal as of Oct. 8. The producer said it was revising prices to reflect the current supply and demand balance and general market conditions.

On Oct. 1, Motiva had been the first one to implement price adjustments, whereby its Star 4 (110 viscosity) grade moved down by 15 cents/gal, its Star 6 (220 vis) cut by 25 cents/gal, and its Star 12 (600 vis) oil by 45 cents/gal.

As seen on the price table below, the adjustments have brought Motivas, Flint Hills Resources and Chevrons prices down to comparable levels.

Within the Group I segment, it was heard that HollyFrontier had lowered its 70/150 grades by 20 cents/gal, its 250 vis by 28 cents/gal, its 525 cut by 45 cents/gal and its bright stock by 10 cents/gal, with an effective date of Oct. 7.

Although the price revisions arrived slightly earlier than expected – given that producers had only just reduced prices in mid-August – many market sources agreed that they were almost inevitable because of recent decreases in crude oil and feedstock vacuum gas oil values, together with an abundance in supply of Group II base stocks, following the introduction of Chevrons Pascagoula barrels.

In fact, several buyers commented that there had been noticeable competitive activity among suppliers in the spot and export arenas.

The falling values in the Group I and II segments were anticipated to exert pressure on the remaining base oil groups. The balance of producers were heard to be evaluating the situation to decide whether to revise prices as well.

On the naphthenic side, buyers were hoping that lower feedstock prices would also result in base oil price reductions. While there was no official notification about price cuts, several sources commented that producers had been offering material at discounts of about 20 to 30 cents/gal over postings, although specific final levels could not be ascertained, because they varied according to supplier, customer, volumes, and other conditions.

Upstream, West Texas Intermediate crude futures continued on a downward trend on the back of the International Monetary Funds pessimistic outlook for global growth in 2015. The U.S. Energy Information Administrations (EIA) reduction of its 2014 and 2015 crude price forecasts, given mounting output and slowing demand, also weighed on crude prices.

WTI settled on the CME/Nymex at $88.85 per barrel on Oct. 7, down $2.31/bbl from a settlement at $91.16/bbl on Sept. 30.

Brent crude was trading around $92.11 per barrel on the CME on Oct. 7, down $2.56/bbl from $94.67/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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