Base Oil Price Report

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ExxonMobil announced Friday that it is raising posted prices for paraffinic base oils in the United States by 10 cents per gallon today. Three other suppliers followed with their own increases in what looks likely to be the fifth round of markups in less than six months.

Meanwhile, naphthenic suppliers completed a round of price hikes begun on that side of the base oil market last week.

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ExxonMobils announcement came four weeks after its most recent increase, and market sources said the company cited the same primary cause that it did last month: competing feedstock demand from fuels. Gasoline and diesel prices have risen again, and base oil suppliers say they need to improve their margins to guarantee continued internal supply of feedstock.

Motiva, Citgo and ConocoPhillips all announced price hikes yesterday. Citgo and ConocoPhillips will both impose across-the-board increases of a dime per gallon, while Motiva will add 10 to 12 cents. All of those increases are also effective tomorrow. Other suppliers made no announcements by the close of business yesterday.

Suppliers acknowledged that base oil buyers have been hammered by the runup in prices. ExxonMobil, the dominant Group I supplier, has now raised posted prices more than 20 percent since late February. Group II leader Motiva has upped its postings between 23 percent and 29 percent.

Its not fun for anyone – buyers or sellers, one marketer said. But [suppliers] arent gaining anything. Were just trying to keep up with our own costs. Prices for vacuum gas oil, the feedstock used to make both base oils and fuels, have risen faster than crude this month, sources said.

On the naphthenic side, Calumet and Citgo both announced increases, completing a round of hikes that began last week. Calumet said it will add 6 cents per gallon to prices for grades 500 and higher and 10 cents to those below 500, effective Aug. 22. Citgo will raise prices for all naphthenic grades 10 cents on Aug. 15.

Crude oil costs surged during the past week, apparently on concerns of supply disruptions after the death last week of Saudi Arabias King Fahd. According to Bloomberg, the price of crude on the New York Mercantile Exchangeset a new record of $64.27 per barrel during trading Monday, before easing and closing at $63.14 yesterday. The latter price was $1.21 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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