U.S. Base Oil Price Report


The market was set to enter the last month of the year on a quiet note, following the Thanksgiving holiday and ahead of an industry meeting in Jersey City, New Jersey, this week.

Several participants were expected to attend the ICIS Base Oils conference from Nov. 29 through Dec. 1, where presentations and discussions were anticipated to center on the future of electric vehicles, the current state of base oil refining and the path forward, the globalization of the engine oil market, and several other issues currently influencing the industry.

In the domestic market, supply conditions have improved over the last few weeks, with most United States producers heard to be running plants at full rates.

Sources reported that a number of API Group II spot offers had emerged for export to Mexico, India, and other destinations for December shipment – a sign that supply levels have improved as there had been almost no spot cargoes available during the September to November timeframe.

Even so, a Group I producer remains sold out and does not anticipate any extra volumes for a couple of months, while another supplier said that the tight fundamentals seen of late, coupled with a recent turnaround and healthy requirements, had resulted in the lowest late November inventories in years.

Motiva lifted its force majeure and allocation two weeks ago, following an unplanned outage at its Port Arthur, Texas, refinery, caused by Hurricane Harvey back in September.

There were reports that ExxonMobil had not removed its allocation program yet, although this could not be confirmed with the producer directly.

Suppliers also commented that base stock requirements had been fairly steady until the Thanksgiving holiday, but they had softened over the last couple of days as is typical for this time of the year.

There continues to be appetite for bright stock in Mexico, but buying ideas were lower than U.S. suppliers indications. Bids for large parcels were heard at or below $3.00 per gallon delivered, and suppliers said these numbers were not workable in the current market environment.

Stable conditions were reported on the naphthenic front, with demand said to be fairly dynamic and prices undergoing no fluctuations this week.

In production news, HollyFrontier plans to shut down its paraffinic base oil plant in Tulsa, Okla., for a routine turnaround next February. The unit can produce 9,500 barrels per day of Group I base oils. The producer is building inventories to cover contract requirements during the outage.

In other production news, South Africa-based energy and chemicals company, Sasol Ltd., announced last week that it will not invest in further greenfields gas-to-liquids (GTL) projects, which means the company has abandoned its proposed GTL project near Lake Charles, Louisiana. (For further details, please see Sasol Nixes Louisiana GTL Plant Project in this issue of Lube Report.)

In other news, a fire that broke out on Tuesday morning in a crude unit at the ExxonMobil refinery in Beaumont, Texas, has been extinguished, with no injuries reported. The refinery used to house a 10,000 barrels per day Group I base oil unit, which ceased production last year.

Downstream, a majority of finished lubricant and additive suppliers have announced price increases in line with higher crude oil and raw material costs. The amount and implementation dates varied among suppliers.

Market participants continued to watch crude oil values closely as future price direction was likely to be determined by the outcome of discussions at the OPEC meeting taking place in Vienna on Nov. 30.

Crude oil futures slipped on Tuesday after climbing in earlier trading sessions as the American Petroleum Institute reported a build of 1.82 million barrels of U.S. crude oil inventories for the week ending Nov. 24, against analyst forecasts for an inventory drawdown of 3.15 million barrels.

WTI futures closed at $57.99 per barrel on the CME/Nymex on Tuesday, Nov. 28, up $1.16/bbl from $56.83/bbl on Nov. 21.

Light Louisiana Sweet wholesale spot prices settled at $64.23 per barrel on Nov. 27, up from $62.14/bbl on Nov. 20, according to data from the U.S. Energy Information Administration.

Brent was trading at $63.61/bbl on the CME on Nov. 28, up $1.04 cents/bbl from $62.57/bbl on Nov. 21.

Low sulfur vacuum gas oil was at Jan WTI plus $11.50/bbl ($69.61/bbl) and high sulfur VGO was at crude plus $9.75/bbl ($67.86/bbl) on Nov. 27. In comparison, low sulfur VGO was hovering at $67.84/bbl and high sulfur VGO at $66.09/bbl on Nov. 20, 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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