Base Oil Price Report


ExxonMobil raised its base oil posted prices Monday, ending a month of no price movements and leading other suppliers to make their own markups.

The market leader added 4 cents per gallon to postings for all grades except bright stock, which was unchanged. Sunoco and Valero announced that they will do likewise, effective July 5 and July 8, respectively. Conoco increased prices for its 70 and 80 neutrals by 6 cents per gallon, its 110 neutral by 5 cents per gallon and its 225 and 600 neutrals by 4 cents per gallon, effective today.

Motiva and Citgo said they had not yet decided what action to take, although observers predicted they would implement increases of some amount next week. Sources said ChevronTexaco had not announced any changes as of yesterday.

Some purchasers called the hikes unexpected, saying base oil margins had already been hovering around average levelsof the past 10 to 15 years. They noted that turnarounds at European base oil refineries – some planned, some not – have caused supply there to tighten. A few months ago, the region had heavy surpluses, and the threat of exports to the United States was helping to hold down prices in the latter market.

I think this was margin management, one purchaser said. They did it because they could. Supply is tight in Europe, at least for the moment, and supply is tight in Asia.

Suppliers, some focusing on recent history, said they were not surprised by the price increases.

The price of crude oil is about where it was at this time last year, a marketer said. But 100 neutral was about 20 cents less [before this weeks increases]. With demand at normal levels, it only made sense that base oil should go up.

If crude stays where it is right now, I wouldnt be surprised to see base oil go up again next month.

Sources said they believed ExxonMobil left its bright stock posting unchanged out of consideration for its own supply-demand balance – they said the company has increased its own production – not because of market conditions. Still, other suppliers were unwilling to raise their own bright stock postings in advance of the markets dominant player.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

Copyright 2002 LNG Publishing Co., Inc. All rights reserved.
Tim Sullivan, Editor. Lube Report, Lubes’n’Greases Magazine and Lubricants Industry Sourcebook are published by LNG Publishing Co., Inc.

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