San Joaquin Refining announced that it would decrease naphthenic base oil prices by 25 cents per gallon across the board this week, on the heels of similar price cuts by producers Ergon and Calumet.
San Joaquins price adjustment will become effective to all customers on Jan. 22, the company stated.
Previously, Ergon had lowered pale oil prices by 15 to 25 cents/gal on Jan. 13, while Calumets 20-cent/gal decrease for its naphthenic oils will be implemented on the same date as San Joaquins, on Jan. 22.
The price revisions are driven by declining crude oil and feedstock costs, and suppliers hoped that the adjustments would stimulate orders at a time of the year when demand is generally sluggish.
There were no price movements mentioned on the paraffinic side, and the market was eerily quiet following several weeks of rapid decreases.
Market participants said that it was impossible to predict when crude oil prices would stabilize and lend stability to the base oil segment, but raw material prices continue to play a major role in the current scenario, sources said.
Suppliers added that customers were keeping a watchful eye on crude oil prices as they expected base stock values to continue on a downward path, and that these movements were guiding their decisions.
One supplier said that, despite the recent price changes, base oil orders were coming in steadily at levels anticipated for January, and another said that some spot inquiries had emerged, although they had not resulted in concluded deals because the seller did not have spot material to offer. However, the fact that some buying interest had started to surface was encouraging, the source commented.
In the finished lubricants segment, it was heard that Valvoline, Shell, Citgo and Castrol had joined Chevron, ExxonMobil and Phillips 66 in adjusting its prices down (see related story in this issue of Lube Report).
Upstream, West Texas Intermediate crude futures slipped from a one-week high as Iraqi production continued to grow to record levels – exacerbating the worldwide supply surplus – and the International Monetary Fund trimmed its global growth outlook.
WTI settled on the CME/Nymex at $46.39 per barrel on Jan. 20, up 50 cents per barrel from a settlement at $45.89 per barrel on Jan. 13.
Brent crude was trading around $47.99 per barrel on the CME on Jan. 20, up 56 cents per barrel from $47.43 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.