Citing some tightening in mid-viscosity and heavier grades, Motiva announced this week an upward move on base stocks. Effective July 12, its 70N and 105N will increase by 5 cents and its 220N and 600N will increase by 10 cents per gallon. Its Group II+ will increase by 5 cents per gallon. Except for the June 25 move by Flint Hills Resources, adding 5 to 10 cents on all grades, no other producers have announced changes. Regarding production, no significant problems were reported for this week.
While the supply-demand balance was the major factor cited regarding the larger price increases for heavier grades versus lighter grades, other issues are again looming for the overall base oil market. One is that crude continues to gain ground, on average, and is currently approaching $73. Along with it is the continued high premium for vacuum gas oil. Although that premium had weakened somewhat, it remains significantly greater than the norm, largely due to problems in refinery crude units.
A third factor racing back to prominence is the price of gasoline. Once again, refinery issues affecting the Midwest are driving spot gasoline prices much higher. After having fallen for six straight weeks, on Monday spot gasoline prices surged ahead, followed by further gains on Tuesday. These prices come to bear on the internal value of feedstocks, and when combined with crude and vacuum gas oil prices, have exerted overall upward pressure on base stock prices in the past.
On the naphthenic side, the market was described as quiet and reasonably balanced at this time.
Crude closed at $72.81 per barrel yesterday on the New York Mercantile Exchange, according to Bloomberg. That was $1.40 above the price one week ago.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.