Base Oil Price Report


The U.S. Energy Information Agencylast weekreleasedyear-end figures on2003 base oil production, and the biggest surprise is that output of paraffinics was nearly even with 2002, despite an unusually large number of disruptions.

In other news, Valero announced it will raise posted prices for three heavy Group I stocks by 6 and 7 cents per gallon, effective March 8.

According to the Energy Information Agency, U.S. base oil plants produced 50.9 million barrels of paraffinics last year, downslightly from51 million barrels in 2002. The market achieved last years total despite three maintenance turnarounds, electrical outages that shut down two plants, and operational problems that plagued ExxonMobils Baytown, Texas, refinery for several weeks. The market also lost 4,500 barrels per day of paraffinic capacity when Shell closed its Deer Park, Texas, base oil plant in March.

One supplier speculated that producers ran plants extra hard when they could because base oil margins were unusually plump for most of the year.

It just goes to show you, when margins get healthy, its amazing what people can get out of their base oil plants, he said.

Naphthenic production dropped 21 percent in 2003 to 9.7 million barrels,but that was no surprise since Shell closed two naphthenic plants during the year. Those plants — in Deer Park, Texas, and Martinez, Calif. — had accounted for more than 20 percent of U.S. pale oil capacity but shut down in March and September, respectively. In addition, market observers said production at some other naphthenic plants was affected early last year by the closure of a crude oil pipeline in western Texas.

Valerosaid yesterday that it is adding 6 cents per gallon to theposted pricesfor its Group I 500 and 700 neutrals and raising its bright stock posting by 7 cents. The company attributed the increases to a strong export market and East Coast refining economics.

The price of crude oil on the New York Mercantile Exchange closed at $36.46 per barrel yesterday, $1.83 higher than a week earlier.

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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