Reports circulated the market that ExxonMobil and Paulsboro would be increasing postings of two API Group I base oils, tracking an upward price trend initiated by Motiva, Phillips 66 and Flint Hills Resources for Group II oils earlier this month.
According to sources, ExxonMobil communicated to buyers that it would be raising the price of its solvent neutral 600 cut and bright stock by 10 cents per gallon. No adjustments were reported for the producer’s Group II/II+ oils. The price table below has been revised to reflect the increase, which goes into effect June 19.
Shortly after this announcement, it was heard that Paulsboro Refining would also be lifting its Group I 600 cut and bright stock by 10 cents/gal, with an effective date of June 24.
According to sources, producers had been eager to raise prices as crude oil values have firmed by about 30 percent since March, and margins have been squeezed.
The upward adjustments this month were kick-started by Motiva, which implemented an 18 cent-per-gallon increase on its Group II 600 vis oil on June 5. Interestingly, the producer concurrently decreased the price of its 110 vis grade by 10 cents, while the price of its 220 vis oil remained unchanged.
Participants speculated that supply of lighter grades was plentiful, and a decrease was sought to stimulate sales.
Phillips 66 followed closely by lifting prices on a number of its base oils – including a couple of low-vis cuts – but there were no revisions on the remaining grades. The producer’s 70 and 80 vis cuts edged up 8 cents per gallon, and its 600 vis oil increased 19 cents on June 8. There were no revisions on the Group II 110 and 225 vis oils, or on the Group III oils.
Flint Hills Resources raised its Group II 600 vis grade by 17 cents/gal, effective June 11. The producer did not revise any of its other base oil cuts.
Aside from firm crude oil prices, the increases were said to be receiving support from a tight supply-demand balance for heavy oils. Not only has demand in the domestic market remained healthy, but interest for exports has also been strong, with several fresh inquiries to move material out of the U.S. Gulf Coast noted during the week.
In crude oil markets, West Texas Intermediate futures strengthened on Tuesday compared to the previous trading session as a tropical storm was expected to hit the oil-producing state of Texas, but global oversupply limited gains and pressured Brent futures. Speculation that U.S. crude stocks had fallen again during the week and strong gasoline values lent additional support.
The price of WTI on the CME/Nymex settled at $59.97 per barrel on June 16, down 17 cents per barrel from its June 9 settlement of $60.14 per barrel.
Brent crude was trading around $62.63 per barrel on the CME on June 16, down $2.25 cents from $64.88 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.