U.S. Base Oil Price Report


Shortly after reports surfaced that ExxonMobil would be increasing posted prices on Jan. 1, Flint Hills Resources also announced a price hike for its API Group II base oils.

Flint Hills raised its 70/75-HC, 100, 230 and 600-vis grades by 10 cents per gallon on Dec. 19 as reflected in the price table below.

According to sources, ExxonMobil will be lifting its Group I bright stock by 15 cents/gal, and all its other Group I, II and II+ grades by 20 cents/gal. The increases will be posted on next week’s Lube Report price table, as they will become effective on Jan. 1.

With the December holidays just around the corner, market activity was expected to slow down, although the question whether other producers would be revising pricing was still on most participants’ minds.

A couple of suppliers said they were considering a price adjustment, but were still evaluating market conditions before making a move.

There was particular interest in Phillips 66‘s plans, given that the producer jointly markets base oils produced at the Excel Paralubes plant with Flint Hills Resources.

The Excel Paralubes plant in Westlake, La. – which has 22,200 barrels per day Group II base oil capacity – will be taken off-line next March for a routine turnaround, and both suppliers were heard to be building inventories.

The upcoming turnaround and tightening of base stocks were thought to be partly driving Flint Hills‘ increase. Sources also surmised that firmer crude oil and feedstock prices were behind the initiative.

At the same time, additional Group II product should be coming into the market in the next few weeks as Chevron was heard to have restarted its Richmond, Calif., plant, following an extended turnaround which lasted approximately two months. The plant can produce 20,700 barrels per day of Group II base oils, and was shut down for maintenance and environmental upgrades in early October.

While no other producers had stepped out with posted price revisions by press time, sources said that a number of sellers had removed their temporary voluntary allowances on spot transactions into a number of accounts.

The TVAs had been granted back in November when the market appeared to be long on product, and suppliers were eager to find a home for their base oil barrels. However, with some grades now appearing to be snug and crude oil prices edging up, there was less of a need to award special discounts, sources noted.

Upstream, crude oil futures jumped on Tuesday after slipping last week, and were headed for a third positive session in a row, ahead of a weekly supply update on crude inventories in the U.S., and anticipation of a tighter global market next year given an OPEC agreement to limit production.

West Texas Intermediate futures on the CME/Nymex settled at $52.23 per barrel on Dec. 20, down 75 cents per bbl from the Dec. 13 settlement of $52.98 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $53.56 per barrel on Dec. 19, down from $54.39 a week ago, according to data from the U.S. Energy Information Administration.

Brent was trading at $55.35 per bbl on the CME on Dec. 20, down 37 cents per bbl from $55.72 per bbl on Dec. 13.

In related news, economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 90th consecutive month, the latest Report On Business published by the Manufacturing Institute for Supply Management showed.

The November Purchasing Managers’ Index (PMI) – an indicator of the economic health of the manufacturing sector – registered 53.2 percent, an increase of 1.3 percentage points from the October reading of 51.9 percent. Of the 18 manufacturing industries categorized by the organization, 11 are reporting growth in November in the following order: Miscellaneous Manufacturing; Petroleum and Coal Products; Paper Products; Computer & Electronic Products; Food, Beverage and Tobacco Products; Chemical Products; Fabricated Metal Products; Plastics and Rubber Products; Machinery; Nonmetallic Mineral Products; and Primary Metals.

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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