U.S. Base Oil Price Report


Another API Group I bright stock price increase trickled into the market, this time at the hands of Calumet, which will raise its posting on May 1.

The 10 cent-per-gallon hike follows similar initiatives by ExxonMobil, Paulsboro and HollyFrontier. The producers implemented 10-cent increases between April 15 and April 20.

Bright stock values have edged up by 20 cents/gal since March, when a previous round of posted price increases lifted numbers by 10 cents/gal.

This heavy Group I cut has been enjoying significant attention, as demand has flourished and availability has tightened, not only in the U.S., but also in Europe and Asia, lending support to campaigns by suppliers to increase prices.

The other heavy-viscosity grades in both the Group I and II categories have attracted healthy buying appetite as well, with spot prices moving up in the last couple of weeks.

While there have not been any initiatives to revise posted prices for the other cuts, suppliers were heard to be more reluctant to grant large discounts off of postings, or have reduced the markdowns on new business. Spot export prices have edged up on snug supplies and increased buying interest.

A similar situation applies to naphthenic base oils, with transformer oils seeing increased demand, and spot prices inching up as a result.

Likewise, rerefiners also commented that orders had been steady throughout the month of April, and this had led to balanced inventories.

U.S. market players were also following developments surrounding a Venezuelan tender calling for a staggering quantity of Group I grades, which was expected to be floated on Thursday.

There were mixed reports about the actual volumes required by the Venezuelan producer, PDVSA, with some sources commenting that the requirements totaled 31,000 metric tons, comprised of 9,000 tons of SN150, 13,000 tons of SN500, 8,000 tons of bright stock and 1,000 tons of blended light vis.

Other sources mentioned that the tender called for a total of 67,000 tons to be shipped in three monthly installments, starting in May, and that it was likely to be awarded to a number of European traders and perhaps U.S. participants as it was such a significant quantity. The buyer was heard to have secured options in the tender to cut back quantities if necessary, and was said to be looking for significant volumes of base stock given ongoing production disruptions at its refineries.

Base oil market players were also keeping an eagle eye on crude oil prices, which continued to inch up throughout the week.

West Texas Intermediate futures climbed on a marked decline in the oil rig count in the U.S. The number of oil rigs is now at the lowest level since October 2010 because of the sharp drop in oil prices since June last year. However, crude inventories continue to mount and analysts were anxiously awaiting the Energy Information Administration report due on Wednesday that was likely to show that stockpiles have indeed grown.

WTI settled on the CME/Nymex at $57.06 per barrel on April 28, up by $1.80 per barrel from a settlement at $55.26 per barrel on April 21.

Brent crude was trading around $64.64 per barrel on the CME on April 28, up $2.56 per barrel from $62.08 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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