Base Oil Price Report


ExxonMobil posted base oil price increases of 2 to 6 cents per gallon yesterday, a move expected to trigger the first across-the-board price movements since August.

According to market sources, ExxonMobil will add 4 cents to its posting for Group I 600 neutral, 6 cents for bright stock and 2 cents for all other Group I and Group II-plus postings. Motiva subsequently said it will raise its Group II and Group II-plus prices by 2 cents. Other suppliers were expected to hike postings, too, but had not done so by the close of business yesterday.

U.S. base oil postings have held steady since suppliers of Group II-plus trimmed their prices in late November. Group I and Group II prices have not moved since August.

Sources said ExxonMobil attributed its markups to escalating costs for natural gas and vacuum gas oil feedstock, along with expectations that base oil supply will tighten with three plants scheduled to close for maintenance during the first quarter. The first of those shutdowns, a four-week closure at ChevronTexacos plant in Richmond, Calif., began last week.

Buyers had varying reactions to the price hikes.

I was surprised they didnt move earlier than they did, given whats been going on with crude and natural gas, one buyer said. If [base oil] demand were real sloppy, they might not have felt like they could recover the margins that theyve been losing, but the economy seems to be picking up.

Others noted that the market has seemed flush in recent weeks, at least for some cuts, with barrels moving at unusually large discounts on the spot market.

If you look at whats going on in the market right now, it contradicts the theoretical projections theyre making, another buyer said. To me, their justification is a bit of a stretch.

The price of crude oil on the New York Mercantile Exchange closed at $33.98 per barrel yesterday, down 79 cents from last 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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