Base Oil Price Report


U.S. base oil suppliers this week completed an expected but ragged round of price cuts, triggered by ExxonMobils reductions Feb. 20.

All other principal U.S. suppliers have now followed suit, although the size of cuts varied among refiners and from product to product. Posted prices for light-viscosity Group I oils and bright stock generally dropped the most – usually 6 or 8 cents per gallon – while middle- and high-viscosity grades and Group II and Group II-plus stocks lost 2 to 7 cents per gallon. Valero bucked that rule by chopping 8 cents off its bright stock but trimming all other cuts by 4 cents.

Suppliers and purchasers said the unevenness of the cuts suggests resistance to the lead of ExxonMobil, which dominates the market with a market share of approximately 40 percent. Several sources, citing the fact that crude oil prices have risen slightly this month, expressed surprise at ExxonMobils base oil price reductions.

I think [suppliers] moved this time according to their own individual supply-and-demand issues, one purchaser said. If they were long on a particular cut, they came down 8 cents, or so. But if they were in balance, maybe 4 was all they needed to do.

This purchaser also suggested that the latest round of cuts – the fourth in just over four months – may be the last for some time. Lubricant demand typically rises during springtime and crude prices appear to have stabilized, at least for the moment.

I would think were done for now, the purchaser said. In fact, if demand picks up, the question should be, how much can crude rise before base oil prices increase?

Valero during the past week opened the truck portion of a new loading rack at its Paulsboro, N.J., refinery. In coming weeks, the $10 million system is scheduled to begin loading rail cars, too. Until now, Valero contracted terminals for orders that required rack loading.

Besides lowering our own costs, this rack gives us total control over loading schedules, prioritization, waiver approval and helping people with emergencies, said Cary Palulis, lube marketing manager.

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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