Base Oil Price Report

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U.S. base oil prices continued their upward trend the past week, as most major paraffinic suppliers joined a round of markups started by ExxonMobil Feb. 25. Group III importer Lithcon implemented previously announced increases. Valero also raised its naphthenic prices.

The latest round of paraffinic increases is the second in three weeks, after four months with no changes. ConocoPhillips, Sunoco, Valero and ChevronTexaco all imposed across-the-board hikes of 5 cents per gallon, duplicating ExxonMobils movement. Motiva added a nickel to its Group II postings and seven cents to its Group II-plus product.

Citgo said it has not changed its prices, and there was no word of movement by Calumet.

Base oil refiners continue to face high costs. Crude oil prices dipped Friday and Monday, then rose $1.01 yesterday, closing at $36.89 per barrel on the New York Mercantile Exchange. Some base oil purchasers worried that their market may face further upward pricing pressure because of supply chain competition from fuels. Vacuum gas oil is a feedstock for both base oil and fuel, and refiners have been shifting production from the former to the latter to take advantage of higher fuel prices and to meet demand for home heating oil.

As that happens, the supply side of the equation for base oils is tightening, and well continue to see upward pressure on prices – even if crude stays where it is, one base oil purchaser said.

Others noted that base oil demand is expected to increase in coming weeks as the lubricants industry emerges from its winter lull. Lubricant production typically rises in the spring as motor oil blenders ramp up for the spring and summer driving seasons. This year, however, the market will be coping with the loss of Shells Deer Park, Texas, refinery, which is shuttering its base oil plant at the end of March. Deer Park has capacity to produce 4,600 barrels per day of paraffinics and 5,000 barrels per day of naphthenics.

The economy has recovered, and were entering this seasonal upturn at a time when the market is losing supply, a marketer said. That means that supply is going to be very tight.

Lithcon typically does not change its prices in tandem with other principal U.S. suppliers. It added 9 cents per gallon to both of its postings late last month, although the increases had been announced a few weeks earlier.

Valero raised its naphthenic prices by 9 cents per gallon, effective Monday, the same date as its paraffinic increases.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

Copyright 2003 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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