U.S. Base Oil Price Report


Reports that ExxonMobil would be increasing posted prices at the start of the New Year caught many by surprise this week, although signs that spot prices were inching up had already become apparent.

According to sources, ExxonMobil will lift its API Group I bright stock by 15 cents per gallon, and all its other Group I, II and II+ grades by 20 cents/gal, effective Jan. 1.

Participants speculated that the increase was driven by firmer crude oil and feedstock prices, and a need to improve thinning margins.

The producers price adjustments will not be reflected in the price table below this week, but will be posted the week of Jan. 1, when they go into effect.

No other postings had been adjusted by press time, but there was talk that a number of suppliers had been able to raise prices for spot transactions, following several weeks of steep discounting and temporary competitive/voluntary allowances (or TCAs and TVAs) applied in an effort to energize sales.

However, the typical lackluster demand and plentiful availability at the end of the year were said to be capping potential gains on the spot front, with increases of about 4 to 5 cents/gal seeing some traction, but many accounts not being affected at all. The market has just started to go in this direction the past few days, a source noted.

Some sellers said that buyers who had rejected offers at specific levels because they were considered too high a couple of weeks ago, were now returning to secure the cargoes at the same prices that had been originally discussed.

Sources explained that the steeper spot prices were seen in response to heightened buying interest for U.S. cargoes from Europe, Mexico and Nigeria.

Many consumers have returned to the market on concerns that base oil prices would be moving up in coming weeks as crude oil futures have firmed. With the price of crude now well over $50/bbl, there is pressure to limit discounts off postings for both Group I and Group II base oils, a source explained.

Furthermore, with a cold front sweeping over the northern part of the U.S. and heating oil prices edging up, refiners would likely divert feedstocks towards the production of fuel and heating oil, rather than base oils, sources added.

On the naphthenic front, no price changes were discussed, but participants said that this segment of the market had not seen the same steep discounting that the paraffinic side had witnessed over the last few weeks.

Additionally, sources were of the opinion that the 10-cent price increase initiated by Cross Oil in October had actually helped keep prices more stable, despite the fact that no other producers had followed Cross lead.

Sources also said that it would not be surprising to see some kind of adjustment soon as pale oil prices have not been revised since May, while crude oil prices have fluctuated significantly.

Meanwhile, participants kept a keen eye on oil values, as futures settled Tuesday at their highest level since July 2015 on new forecasts reflecting a possible increase in demand for next year, and the output cuts agreed by major oil-producing nations helping stabilize prices.

Over the weekend, 11 non-OPEC countries including Russia agreed to reduce their production by 558,000 barrels a day. The total sum represents almost 2 percent of global supply.

West Texas Intermediate futures on the CME/Nymex settled at $52.98 per barrel on Dec. 6, up $2.05 per bbl from the Dec. 6 settlement of $50.93 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $54.39 per barrel on Dec. 12, up from $53.12 a week ago, according to data from the U.S. Energy Information Administration.

Brent was trading at $55.72 per bbl on the CME on Dec. 13, up $1.79 per bbl from $53.93 per bbl on Dec. 6.

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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