ConocoPhillips announced yesterday that it will lower posted prices for Group II base oils in the United States by between 16 cents and 22 cents per gallon, effective tomorrow. Buyers said its about time for other suppliers to join in and give the market its first round of markdowns in more than two years.
Elsewhere, ExxonMobil lifted sales allocations on a Group II-plus stock last week after repairing a damaged unit at its base oil plant in Baytown, Texas.
Other than ConocoPhillips notice, there was no word by the close of business yesterday of changes by any other big base oil suppliers. But ConocoPhillips cuts attracted immediate notice, both because of their large size and because they run counter to the run-up that has rocked the market since mid-2004. ConocoPhillips reported no change in posted prices for its imported Group III stocks.
Market sources cited several possible factors that may have played a role in the companys decision: loosening of supply, which has been tight since severe disruptions in 2005 and early this year; declining crude oil costs; and the fact that two Group II suppliers – Motiva and Flint Hills Resources – did not join the most recent round of increases last month.
Once ConocoPhillips new prices take effect, they will be in line with Motivas and Flint Hills – actually a nickel cheaper than their lowest price in the 100 neutral range. Postings for all three companies will be cheaper than corresponding Group I products with viscosities of at least 100 SUS, with the exception of Citgos Group I 100 neutral.
Base oil buyers were enthused to hear of ConocoPhillips cuts, but said they were not surprised.
Thats really good news, one buyer said. Its been a long time since we had a price decrease, but when you look at how much fuel prices and crude have come down, it makes a lot of people ask why base oils havent done the same.
ExxonMobils EHC 45 – a Group II-plus stock – had been under sales allocations of 80 percent since mid-July, when the company shut down a distillation unit at the Baytown plant to perform repairs. Sources outside the company said the allocations were lifted last week, and ExxonMobil confirmed yesterday that it is again meeting commitments for the product. A spokeswoman said the repairs were completed last month.
The cost of crude oil on the New York Mercantile Exchange closed yesterday at $61.19 per barrel, according to Bloomberg. That was 55 cents lower than the price a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.