U.S. Base Oil Price Report


With U.S. base oil price direction still somewhat unclear, and a number of uncertainties plaguing the market, participants are turning their attention to crude oil, hoping to find an answer to what may lie ahead for base oil pricing.

But if players are looking for a rosier picture in the crude sector, they will certainly not find it there, as prices are expected to remain “choppy” this year, and overall lower than a year ago due to a global supply glut, according to industry insiders.

Similar conditions have been observed in the base oil segment, given that product availability continues to outstrip demand, and additional product is expected to enter the system from the expanded ExxonMobil plant at Baytown, Texas, in the second half of the year.

While producers have been striving to attain a more balanced situation by trimming production rates and lowering prices to stimulate buying appetite in the last quarter of 2014, certain segments of the market remain top-heavy.

Meanwhile, posted prices are unchanged, following recent upward adjustments by Chevron, ExxonMobil, Calumet, HollyFrontier, Paulsboro, and Safety-Kleen on a number of paraffinic oils.

Market participants admitted that it was somewhat of a relief not to have any price changes for a while, following a dizzying spell of adjustments in recent months.

Availability of the lighter grades is plentiful, according to sources, but the heavy-vis cuts have tightened, allowing for some upward price movement on the spot front.

The posted bright stock price hike implemented in the second half of March through early April appears to have faced little opposition as supplies for that cut have dwindled.

Sources confirmed that bright stock spot volumes are scarce, and that the SN500-600 cuts within the Group I segment appear to be snug and only available at steeper spot indications.

A producer conceded it was not able to entertain any bright stock and heavy-vis spot opportunities as it was sold out of these grades.

Activity on the export front has slowed down somewhat due to the Easter/Holy Week holiday, particularly as far as sales into Mexico are concerned. Buying interest had picked up before the holiday, and then subsided, but suppliers hope to see a revival in coming weeks.

In the naphthenic segment, all grades are described as balanced, and no price revisions have been reported. With few exceptions, the March 6 price decrease initiated by Ergon was not thought to have had a major impact on the general naphthenic pricing structure.

Upstream, West Texas Intermediate (WTI) futures continued to strengthen on favorable jobs data and U.S. government forecasts for lower domestic crude production growth against increased global demand.

WTI futures settled on the CME/Nymex at $53.98 per barrel on April 7, up $6.38 per barrel from a settlement at $47.60 per barrel on Mar. 31.

Brent crude was trading around $59.10 per barrel on the CME on April 7, up $3.99 per barrel from $55.11 per barrel 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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