U.S. Base Oil Price Report


The U.S. base oil market was quiet ahead of the Thanksgiving holiday on Nov. 26, with prices remaining unchanged and one producer heard to be wrapping up a turnaround this week.

Talk circulated that HollyFrontier’s 9,500 barrels-per-day API Group I plant in Tulsa, Okla., had been shut down earlier in November for a routine turnaround, and sources anticipated the plant to be restarted at the end of the month, but this could not be confirmed with the producer.

The turnaround would have coincided with the time of year when demand tapers off, and manufacturers generally strive to lower inventories, so no supply disruptions were anticipated from the shutdown.

It was also heard that Motiva had postponed a turnaround at one of its base oil trains at Port Arthur, Texas, until the first quarter of 2016. The unit had originally been expected to be taken offline in October. Motiva’s total Group II production capacity at Port Arthur is 40,300 b/d.

On the naphthenic side, requirements were also said to have steadily declined over the last few weeks, but no further price adjustments surfaced following the decreases introduced on Nov. 4-12.

San Joaquin Refining plans to slow crude oil runs and complete a turnaround at its Bakersfield, Calif., refinery in the first quarter as well. San Joaquin’s base oil plant can produce 8,100 b/d of pale oils.

Upstream, crude oil jumped to two-week highs on Tuesday, rising more than 3 percent on heightened Middle East tensions after Turkey shot down a Russian fighter jet that reportedly crossed into Turkish airspace.

West Texas Intermediate closed on the CME/Nymex at $42.87 per barrel on Nov. 24, up $2.20 per bbl from its Nov. 17 settlement of $40.67.

Brent was trading around $46.12/bbl on the CME on Nov. 24, up $2.55/bbl from $43.57/bbl a week earlier.

Base oil market participants keep an eye on the Manufacturing Index as it serves as an indicator of the country’s economic well-being. The October Manufacturing Index (Purchasing Managers’ Index, or PMI) registered 50.1 percent, a decrease of a 0.1 percentage point from the September reading of 50.2 percent, according to the latest Institute for Supply Management report.

The contraction is attributed to lower global requirements of manufactured goods, while volatile crude oil and other commodities tempered demand for machinery and industrial components.

Likewise, consumer confidence also declined in November. The Conference Boards index slumped to 90.4 – the lowest since September 2014 – from a revised October reading of 99.1, the New York-based private research group said this week.

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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