Healthy base oil demand and limited availability of most grades supported stable pricing in the U.S. market, following the implementation of posted price increases over the last three weeks.
While some of the factors leading to the price hikes have softened – crude oil values have weakened since the increases were first introduced – a tight supply and demand scenario was said to be shoring up the current price levels.
A number of producers continue to report sold-out positions for certain cuts and are prioritizing contractual obligations while turning down fresh spot and export opportunities. Domestic inventories in general were deemed very low.
API Group II base oils were heard to be particularly snug, as a 52-day turnaround was recently completed at the Excel Paralubes Group II unit in Westlake, Louisiana. There was a slight setback when the plant was brought back on line at the end of April, but the unit was heard to be running well, according to sources.
There were reports that a 22-day turnaround had also commenced at the Chevron Group II plant in Pascagoula, Mississippi a few days ago, but this could not be confirmed with the producer directly.
Additionally, Motiva was expected to take one of its Group II base oil trains off-line for maintenance in June.
In other production news, Calumet announced last week that the company would be starting production of Group III base oils at its facilities in Shreveport, Louisiana. The refinery will have a capacity of 400 barrels per day of Group III base oils, and will continue to produce 4,800 barrels per day of Group I grades, 6,600 b/d of Group II cuts, and 100 b/d of naphthenic oils.
Upstream, crude oil prices fell a little over 1 percent on Tuesday on concerns about rising US supply, slowing global demand, and a stronger dollar.
West Texas Intermediate futures on the CME/Nymex settled at $45.88 per barrel on May 9, down $1.78/bbl from $47.66 per barrel on May 2.
Light Louisiana Sweet wholesale spot prices closed at $48.56 per barrel on May 8, and had settled at $50.68/bbl a week earlier, according to data from the U.S. Energy Information Administration.
Brent was trading at $48.73/bbl on the CME on May 9, down $1.73/bbl from $50.46/bbl on May 2.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.