U.S. Base Oil Price Report


Avista Oil announced a price hike for its API Group II base oil and the availability of a new Group III grade at its rerefinery, Increases announced previously by SK take effect this week, and Chevron surprised some observers by reducing its Group II postings.

Avista Oil increased the posted price of its Group II cut by 15 cents per gallon, with an effective date of January 16.

At the same time, Chevron communicated a 5-cent/gal decrease for its Group II base oils, to go into effect on Jan. 18.

Market sources speculated that the producer was lowering its prices to bring them more in line with the rest of the Group II postings.

These moves come on the heels of price hikes by a majority of base oil suppliers in previous weeks, including SKs, whose 15-cent/gal increase will be implemented on its Group II+/III cuts on Jan. 18 as portrayed in the price table below.

Avista Oil also announced that it was officially posting prices for its Group III 4 centiStoke cut produced at the companys Peachtree City, Georgia, rerefinery (for more details, see Avista Rerefinery Making Group III in the Dec. 7, 2016, edition of Lube Report).

The posting of Avistas Group II+ cut on the price table will be discontinued, and a new posting for its Group III cut has been added.

The latest string of U.S. base oil price adjustments resulted in price hikes between 5 cents/gal and 20 cents/gal, depending on the grade and the producer, with the exception of Chevrons revision, which calls for a decrease.

A couple of suppliers commented that demand appeared to have been dampened somewhat by the increases, and that buyers were taking their time before making any decisions as far as purchases were concerned. The Martin Luther King holiday on Monday also slowed activity down slightly this week.

Other sellers noted that they had not seen any major changes in requirements, and that most buyers – both on the naphthenic and paraffinic sides – had accepted the hikes without objections.

Nevertheless, supplier sources did acknowledge that end-users and traders were carefully checking prices with different suppliers before committing to February cargoes.

The base stock price increases have also triggered price revisions in the downstream lubricants market. While most suppliers are currently mulling potential price revisions, Shell stepped out with a price hike for its finished lubricants (see related story in this weeks Lube Report).

On the export front, there has been some inquiries from Mexican buyers because availability from the local producer, Pemex, remains tight given ongoing production issues.

Buyers in other regions such as Europe have shown some interest in U.S. product, but prices may not be as competitive as they had hoped.

Domestic supply of Group II oils is expected to tighten due to a turnaround at the Excel Paralubes plant in Westlake, Louisiana, in March. The Excel Paralubes plant has capacity of 22,200 barrels per day of Group II base oils and production is jointly marketed by Phillips 66 and Flint Hills Resources.

There were also reports that Chevrons 25,000 b/d Group II plant in Pascagoula, Mississippi, would be taken off-line some time in the first quarter for maintenance, but this could not be confirmed with the producer directly.

Upstream, crude oil futures were boosted by a weaker U.S. dollar, with the British pound close to registering its best day since 2008 on Tuesday, as the promise of a parliamentary vote on Brexit strengthened it. Reports that crude oil production in the Asia-Pacific region – and China in particular – is declining also offered support to crude values.

West Texas Intermediate futures on the CME/Nymex settled at $52.48 per barrel on Jan. 17, up $1.66 per bbl from the Jan. 10 settlement of $50.82 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $53.79 per barrel on Jan. 13 (there was no trading on Jan. 16 due to the Martin Luther King holiday), from $53.53 on Jan. 9, according to data from the U.S. Energy Information Administration.

Brent was trading at $55.47 per bbl on the CME on Jan. 17, up $1.83 per bbl from $53.64 per bbl on Jan. 10.

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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