Base Oil Price Report

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U.S. base oil suppliers completed another round of price increases the past week, and some observers said it amounted to nothing less than upheaval for the market. Some oils from Group II supplier Motiva are now priced below Group I stocks.

It was already incredible that Group IIs were priced just above Group Is, one marketer said, referring to the relation between posted prices before the most recent markups. The idea that they would be priced below Group Is is just absurd.

Group II producer ConocoPhillips decided not to raise prices – a move that some attributed to Motivas recent aggressiveness.

Group I suppliers stuck to the pattern set last week by ExxonMobil and followed by Citgo and Valero. Sunoco added 6 cents per gallon to its postings for solvent neutral 70 and 100 and bright stock, raised S.N. 148, 500 and 600 by a nickel and left its middle-weights unchanged. Calumet raised its S.N. 60 and bright stock 6 cents.

In contrast, there was little if any rule to changes for Group II oils. Motiva added 3 cents and 5 cents respectively to its S.N. 145 and 600 but did not change prices for its 70, 105 and 305 cuts. ChevronTexaco raised postings for its 110- and 225-weights 3 cents, its S.N. 600 a nickel. Flint Hills Resources upped its 600 cut by 6 cents, its 100 by 4 cents, its 70- through 80-weights by 3 cents and its 200 by 2 cents. Calumet, which also makes Group IIs, raised its S.N. 80 and 100 6 cents, its 150 by 5 cents.

Group II base oils have been priced above Group Is for the past three years. The spread between the lowest Group II posting and the lowest Group I posting was 9 cents per gallon earlier this year, but Motiva has been chopping away at it in recent weeks, stating that it wanted to encourage motor oil blenders to start making products that meet the new ILSAC GF-4 specification, which generally requires increased amounts of more highly refined base oils.

Many observers had already expressed surprise when the Group II premium for S.N. 100 was shaved to just a penny. Motivas posted price for S.N. 105 is now 5 cents cheaper than the lowest Group I posting for S.N. 100. Motiva’s S.N. 600 has the same price as ExxonMobil’s Group I for the same viscosity and is cheaper than the corresponding product from other Group I suppliers.

Its pretty remarkable, one base oil marketer said. The Group II is obviously a higher quality base oil, so its very surprising that it could be priced for less.

The price of crude oil on the New York Mercantile Exchange closed yesterday at $43.16 per barrel, 91 cents 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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