U.S. Base Oil Price Report


Posted prices underwent no further revisions this week, following Motivas decrease and Phillips 66s increase, which went into effect on Oct. 4.

Last week Motiva lowered its API Group II light-vis grade by 15 cents per gallon, its mid-vis base oil by 17 cents/gal, and its heavy-vis oil by 10 cents/gal, while Phillips 66 increased the posted price of its Group II 600N grade by 10 cents/gal.

The two producers values moving in opposite directions was slightly disconcerting, and this, together with volatile crude oil values, led several market players to adopt a wait-and-see position regarding further revisions – although one refiner was heard to have initiated price discussions with a number of customers on Tuesday.

According to sources, ExxonMobil would be granting TVAs (temporary voluntary allowances) of 15 cents/gal on its light grade, and 17 cents/gal on its mid-vis cut to selected accounts who purchase Group II/II+ cuts, effective Oct. 13.

The TVAs were implemented in response to Motivas posted price decreases, sources speculated.

There was no discussion of discounts on other Group I grades, and the changes were not considered to be posted price revisions, sources noted.

Participants were slightly surprised that Group I prices would remain unchanged, as there has been some downward pressure on the heavy-vis cuts and bright stock on account of lengthening supplies.

On the other hand, there were reports that the Group II heavy-vis grades were very tight given Chevrons ongoing turnaround at its Richmond, Calif. refinery, together with recent production hiccups at the Excel Paralubes plant in Westlake, La.

Chevrons base oil plant in Richmond produces 20,700 barrels per day of Group II oils. The Excel Paralubes unit has capacity to produce 22,200 b/d of Group II grades, which are jointly marketed by Phillips 66 and Flint Hills Resources.

Sources commented that the Excel Paralubes plant had suffered some production setbacks linked to high temperatures during the summer, but these issues have been resolved and the plants heavy neutral yields have improved. The facility is expected to undergo a turnaround in March next year, but confirmation could not be obtained.

There were also rumblings that ExxonMobil was preparing to take its Baytown, Texas, refinery off-line for a turnaround in late October/early November. The refinery houses a 9,800 b/d Group I and 18,200 b/d Group II base oils plant.

Other segments of the market remained fairly quiet due to the Columbus Day holiday on Monday, and the upcoming ILMA industry meeting starting Oct. 15 in Scottsdale, Ariz.

Upstream, crude oil futures fell almost 2 percent on Tuesday – retreating from one-year highs – after it appeared unclear whether Russia would cooperate with OPEC to reduce output.

Furthermore, the International Energy Agency said that it was difficult to predict whether the current oversupply situation would improve even if Russia and OPEC agreed on a production cut.

Nevertheless, WTI futures on the CME/Nymex settled higher than a week ago at $50.79 per barrel on Oct. 11, up $2.10 per bbl from the Oct. 4 settlement of $48.69 per bbl.

Light Louisiana Sweet wholesale spot prices were not available on Oct. 10 due to the Columbus Day holiday. Spot prices closed at $50.30 per bbl on Oct. 3, according to data from the U.S. Energy Information Administration.

Brent was trading at $52.41 per bbl on the CME on Oct. 11, up $1.54/bbl from $50.87 per bbl on Oct. 4.

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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