U.S. Base Oil Price Report

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The U.S. market continues to enjoy fairly stable conditions, with pricing for some base oil grades receiving extra support from an upcoming plant outage.

Additional details emerged about Chevron’s imminent turnaround at its Richmond, Calif., refinery, which is expected to start in early October.

According to sources, the extended turnaround is anticipated to last close to two months, during which the entire refinery will be off-line to complete work aimed at improving environmental compliance.

Given that Chevron’s 20,700 barrels per day API Group II base oil unit at the refinery will be down during this period, the producer was heard to have placed its base stocks on allocation. The producer was heard to have built inventories ahead of the turnaround, but is likely to be unable to meet all obligations during the outage.

However, there was no confirmation available from the producer about the turnaround, or how it would be affecting supply.

Participants surmised that the outage would tighten availability of Group II cuts in the domestic market, offering support to current price indications.

About 20,000 tons of base oils were also heard to have been shipped out of Chevron’s Pascagoula, Miss., plant this month, which should tighten availability from the producer further, sources said.

Posted prices have not experienced any adjustments since late August, when Chevron had increased its postings by 20 cents per gallon across the board, ahead of its turnaround.

No other producers revised prices at that time, as fundamentals were not as clear-cut as earlier in the year, with crude oil prices showing volatility and demand starting to wane as the fall season approached.

There were no price movements noted on the naphthenic front this week, either, although some pockets of competitive activity were observed on the spot side of the business.

Pale oil orders continue to be characterized as steady, and supply is deemed more than adequate to meet requirements, but activity tends to weaken at the start of the last quarter of the year, leading suppliers to look for ways of enticing customers.

Further to the information published last week about Ergons new bright stock production, the producer officially announced the availability of HyGold 5000BS, a product of the companys investment in the latest Group I bright stock refining technology. The first orders of bright stock are expected to be shipped in October.

In a press release published on Sep. 26, Ergon explained that recent modifications at the companys refinery in Vicksburg, Miss., will allow for production capacity of one million barrels per year of HyGold 5000BS.

The new bright stock is well-suited for a wide range of lubricant applications, including greases, marine engine oils and cylinder lubes, high viscosity/monograde engine oils and a variety of industrial gear oils.

Thanks to the investment, Ergon has become the second largest Group I bright stock producer in the world, the release noted.

Upstream, crude oil futures slipped on Tuesday as there was growing skepticism that the Organization of the Petroleum Exporting Countries would reach an agreement to curb production at a meeting in Algiers later this week. Crude oil prices have been suffering in recent years due to a persistent glut of crude on a global scale.

However, WTI futures on the CME/Nymex were trading slightly higher than a week ago, with prices settling at $44.67 per barrel on Sep. 27, up $1.23 per bbl from the Sep. 20 settlement of $43.44 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $47.22 per bbl on Sep. 26, up from $44.97 per bbl on Sep. 19, according to data from the U.S. Energy Information Administration.

Brent was trading at $45.97 per bbl on the CME on Sep. 27, just 9 cents/bbl up from $45.88 per bbl on Sep. 20.

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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