U.S. Base Oil Price Report


Contrasting currents swayed the U.S. base oil market this week, as Motiva lowered its posted prices, while Phillips 66 sought an increase.

Motiva was heard to have decreased its API Group II STAR 4 cut (110 viscosity) by 15 cents per gallon, its STAR 6 (220 vis) grade by 17 cents/gal and its STAR 12 (600 vis) oil by 10 cents/gal as of October 4.

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A lengthening Group II supply/demand balance caused in part by a seasonal slowdown was thought to be one of the reasons behind Motiva’s price drop.

There was also talk that deep-sea cargoes would be shipped to the U.S. in coming weeks as Asian prices have declined and availability has improved in that region. This could help ease the current tightness in the domestic market, sources suggested.

Rumblings that a 5,000-metric ton cargo of Group II 500/600N was on its way to the U.S. from South Korea could not be corroborated.

In the other camp, Phillips 66 announced that it would be increasing its Group II Pure Performance 600N grade by 10 cents/gal, also with an effective date of Oct. 4, resulting in a posting of $3.10/gal. The producer did not revise any of the other base oils it offers.

Participants conjectured that rising crude oil prices during the week, together with tight conditions for the Group II 600N cut on the back of a turnaround at Chevron’s Richmond, Calif., base oil plant had fueled Phillips 66’s increase.

Chevron’s facility was expected to be off-line for close to two months and the producer’s base oil supply remains on allocation.

Meanwhile, in the Group I tier, it was heard that spot prices had softened on plentiful availability.

Sources also indicated that a large refiner had offered Group I cuts – the heavy-vis cut in particular – at very competitive prices in Mexico.

Base oil players were also watching a Venezuelan tender, which called for two 10,000- to 15,000-metric ton cargoes each of Group I base stocks to be shipped in October and November. There were reports that Shell had been awarded, but this could not be confirmed.

Upstream, crude oil prices hit three-month highs, rising more than one percent on Monday, while Brent settled above $50 per barrel for the first time since August.

Futures climbed as Iranian President Hassan Rouhani tried to persuade his Venezuelan counterpart Nicols Maduro that oil producing countries should cooperate to raise the price of oil and stabilize the market.

WTI futures on the CME/Nymex settled at $48.69 per barrel on Oct. 4, up $ 4.02 per bbl from the Sep. 27 settlement of $44.67 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $50.30 per bbl on Oct. 3, up from $47.22 per bbl on Sep. 26, according to data from the U.S. Energy Information Administration.

Brent was trading at $50.87 per bbl on the CME on Oct. 4, up $4.90/bbl from $45.97 per bbl on Sep. 27.

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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