Base Oil Price Report

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Motiva imposed hefty price hikes on its base oils today, less than three weeks before the scheduled unveiling of its massive Port Arthur, Texas, expansion. There was no word yet of movements by other paraffinic producers – except for an announcement by Calumet last week – but observers said chances are good that more markups will follow.

Meanwhile, naphthenic suppliers completed a round of increases led last week by Nynas.

Motiva said yesterday that it was raising posted prices on its Group II and Group II-plus oils by between 10 cents and 14 cents per gallon. Market sources said it was not surprising to see prices going up.

Theres probably about five or six reasons, one marketer said, citing recent jumps in crude oil costs, continued tight supply in the wake of Hurricane Rita and plant shutdowns.

Still, several observers called it noteworthy for Motiva to be raising prices ahead of its expansion, which is now scheduled to come online around Feb. 10. The project will increase capacity by 15,000 barrels per day to 40,000 b/d.

I guess this supports their contention that they have pretty much placed the additional barrels, as opposed to the idea that [the expansion] was going to flood the market, another marketer said. Either that or theyre bluffing.

Calumet said Jan. 18 that it will increase its posted prices by 10 cents across the board on Jan. 30. Observers said other paraffinic suppliers may follow Motivas action, especially in light of crude trends. The price of crude on the New York Mercantile Exchange closed yesterday at $66.75 per barrel, according to Bloomberg. That was even with a week ago but up $8.97 since the last week in December.

Naphthenic producers blamed crude prices and previous increases in transportation, energy and other costs for their own price hikes. Calumet, Cross, Ergon and Citgo all announced 10-cent hikes effective Jan. 30, Feb. 1, Feb. 3 and Feb. 10, respectively. San Joaquin Refining said it will do the same with changes for various customers taking effect between Feb. 1 and March 1.

San Joaquin also said it is warning customers that it may have to impose allocations during a two-week maintenance turnaround scheduled for March. The company said it is trying to build inventories so it can maintain deliveries during the shutdown but that it may not succeed.

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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