U.S. Base Oil Price Report

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Phillips 66, Kleen Performance Products, Calumet and San Joaquin Refining joined the group of producers that have increased prices over the last couple of weeks, while Petro-Canada announced that it would formally start posting prices in Lube Report as of Oct. 10.

Phillips 66 communicated increases of 11 cents per gallon for its API Group II Pure Performance 70N and 80N base oils; 12 cents/gal for its PP 110N; and 10 cents/gal for its PP 225N and 600N, with an effective date of Oct. 6.

Kleen Performance Products was heard to have marked up its posted Group II+ prices by 12 cents/gal on Oct. 9.

In the previous weeks, paraffinic base oil producer Flint Hills Resources had communicated price hikes for its Group II base stocks of 11 and 14 cents/gal, effective September 18, while Chevron lifted its Group II prices by 12 cents/gal across the board on Oct. 4.

On the naphthenic front, Ergon and Cross Oil were the two first producers out of the gate to increase pale oils by 15 cents per gallon, followed closely by Calumet and San Joaquin Refining.

Ergons and Cross Oils increases became effective Oct. 6, while San Joaquin notified customers of a 15 to 20 cent/gal increase, depending on the product and the location, effective Oct. 9.

Calumet will lift the price of all of its naphthenic grades by 15 cents/gal on Oct. 12.

Base oil supply continued to be tight in the U.S. due to plant shutdowns and reduced rates at several of the facilities that were affected by Hurricane Harvey.

Participants were encouraged to hear that most of the base oil facilities have restarted operations, following careful inspections and needed repairs, including Motivas Port Arthur, Texas, refinery, and ExxonMobils Baytown, Texas, unit.

Motiva was heard to have begun the restart process at its Group II base oil plant on Oct. 1. The base oil trains were said to be running very well this week, according to a source familiar with the companys operations. Since the refinery that houses the base oil unit was also running well, there have been no problems with feedstock supply.

Motivas allocation program remains in place, with contract customers receiving shipments according to the plan outlined by the producer, but there were no spot volumes available. There was speculation that the allocation plan may remain in place through October and possibly into November, although the allocation percentages would improve gradually, sources said.

ExxonMobils Group I, II and II+ base oil plant was also heard to have been restarted, and was running fairly well, although not at 100 percent capacity, according to sources. The producers force majeure and allocation program have not been lifted, but most Group I customers were heard to be receiving close to the full amounts specified in their contracts.

No producer confirmation was available regarding the status of the two plants or their allocation programs.

Meanwhile, Calumet was preparing to shut down its Shreveport, Louisiana, plant for a scheduled turnaround. The shutdown was originally slated for November, but the company has advanced the maintenance to Oct. 15. The plant will remain off-line for two weeks, and the producer will continue to cover contractual requirements from existing inventory during the outage. The Shreveport paraffinic plant has capacity to produce 4,800 b/d of Group I, 6,600 b/d of Group II, and 400 b/d of Group III oils.

It was also heard that Chevron had shut all units at its Pascagoula, Mississippi, refinery on Oct. 6 as Hurricane Nate threatened to make landfall in Mississippi late last week. The storm has since been downgraded to a tropical depression.

Upstream, crude oil futures surged by almost 3 percent on Tuesday after Saudi Arabia said it would cut oil exports in November – prompted by declining demand – while about 85 percent of U.S. oil output in the Gulf of Mexico was still shut down as of Monday on account of Hurricane Nate.

On Tuesday, Oct. 10, West Texas Intermediate futures settled on the CME/Nymex at $50.92 per barrel, up 50 cents/bbl from $50.42 per barrel on Oct. 3.

Light Louisiana Sweet wholesale spot prices closed at $55.23 per barrel on Oct. 9, slightly down from $55.72/bbl on Oct. 2, according to data from the U.S. Energy Information Administration.

Brent was trading at $56.61/bbl on the CME on Oct. 3, up 61 cents/bbl from $56.00/bbl on Oct. 3.

Low sulfur vacuum gas oil was at Nov WTI plus $14/bbl ($63.58/bbl) and high sulfur VGO was at crude plus $10.75/bbl ($60.33/bbl) on Oct. 9. In comparison, low sulfur VGO was hovering at $64.83/bbl and high sulfur VGO at $62.08/bbl on Oct. 2, according to data published by PetroChemWire.

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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