Several price increase initiatives surfaced this week in the paraffinic base oil market on the back of steep crude oil and derivatives values, and a very tight supply/demand balance.
ExxonMobil was heard to have raised its API Group I, II and II+ base oils by 20 cents/gal on June 3.
While a vast majority of sources reported the 20 cent/gal increase for all ExxonMobil products, a couple of buyers said that they had either agreed on a slightly lower number for Group I bright stock, due to contract terms, or that they were still in discussions with the producer regarding the price hikes.
Phillips 66 also stepped out with a price increase of 20 cents/gal for its Group II Pure Performance 70 neutral, 80N, 110N, 225N and 600N grades, which took effect June 3.
Kleen Performance Products indicated it would adjust postings up for its Group II+ RHT 120 and RHT 240 base oils by 20 cents/gal, effective June 6.
Motiva lifted its Group II STAR 4 (110 viscosity), STAR 6 (220-vis) and STAR 12 (600-vis) oils 20 cents/gal as of June 7.
Along similar lines, HollyFrontier lifted all of its Group I base oils by 20 cents/gal on June 7.
Calumet also communicated that it would mark up its Group I and II base oils by 20 cents/gal on June 9.
All of these initiatives echoed Chevrons most recent Group II posted price markups of 20 cents/gal, which went into effect on May 25.
By deadline, no price revisions had been heard from Flint Hills Resources for its Group II grades, Paulsboros Group I cuts, or Phillips 66s and SKs Group II+ and III oils.
Most base oil suppliers agreed that the market had become very tight in the last few weeks, with buoyant interest from the export market partly contributing to the snug conditions.
We can barely keep up with contracted volumes, a paraffinic base oil producer commented, and a couple of other sellers concurred that there were few – if any – spot cargoes available for June shipment.
A similar situation seemed to prevail on the naphthenic side, as demand has been healthy and suppliers inventories were strained. Pale oil prices have also been adjusted up over the last couple of weeks.
Upstream, crude oil futures hit 2016 highs on Tuesday, settling above $50 a barrel for the first time in almost a year, on expectations that U.S. oil stockpiles would fall more than expected, and concerns about global supply shortfalls due to attacks on Nigerias oil industry.
West Texas Intermediate futures settled on the CME/Nymex at $50.36 per barrel on June 7, up $1.26 per bbl from the May 31 settlement of $49.10 per bbl.
Light Louisiana Sweet wholesale spot prices closed at $51.46 per bbl on June 6, compared to $51.06 per bbl on May 27, according to data from the U.S. Energy Information Administration.
Brent was trading at $51.44 per bbl on the CME on June 7, up $1.75 per bbl from $49.69 per bbl a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.