Base Oil Price Report


The good news for base oil buyers is that ExxonMobils Baytown, Texas, refinery is back to operating normally and scheduled to end supply allocations June 30. The bad news is that it may become a smaller player in the merchant market.

Many buyers have been feeling the pinch since 20,000-barrel-per-day Baytown encountered operational problems after undergoing a scheduled maintenance turnaround last winter. The company stated in April that it had put contractual customers of three products – Group II-plus EHC 45, Group I 600 neutral and bright stock – on allocation indefinitely.

According to sources, the plant had returned to normal operations by last month, although the company continued to limit deliveries in order to build emergency inventories. Allocations are scheduled to be lifted at the end of this month. However, sources said ExxonMobil has also indicated that it will not have supply beyond contracted volumes.

Thats a big deal, because youre talking about the dominant player in the market, one industry observer said. Even psychologically, its bound to get peoples attention.

ExxonMobil also operates two other U.S. base oil plants,at Baton Rouge, La., and Beaumont, Texas (combined capacity: 28,500 b/d).

An ExxonMobil spokesmantold Lube Reportyesterday that allocations are still in effect but declined further comment.

Buyers and sellers elsewhere in the market suggested two possible reasons that merchant sales from Baytown might be reduced or eliminated. First, they said, ExxonMobil claims to have picked up customers since Shell Oil Products US closed its base oil plant at Deer Park, Texas, in March. That plant had capacity to produce 4,500 b/d of paraffinic stocks and 5,000 b/d of naphthenics.

Observers also noted that ExxonMobil has closed its base oil plant at Adelaide, Australia, and speculated that it may be supplying that market from its refineries in Singapore, thereby reducing availability of Singapore output for the United States.

The price of crude oil on the New York Mercantile Exchange closed at $30.90 per barrel yesterday, down from $31.68 a week earlier. Paraffinic posted prices in the United States were unchanged again this week.

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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