Coming on the heels of recent price increases on Group II stocks, the latest round of price moves picked up momentum with ExxonMobil, Valero, Calumet and ConocoPhillips all announcing changes effective this week. ExxonMobil, Valero and Calumet are moving all their paraffinic grades upward by 10 cents per gallon, including Group I, Group II and Group II+, where applicable. ExxonMobils change took effect yesterday, July 17, while the effective date for both Valero and Calumet is Friday, July 20.
Effective today, July 18, ConocoPhillips is adding 10 cents per gallon to its 70N, 225N, 600N and all Group III grades. Its 80 Neutral is increasing by 7 cents per gallon, and its 110N is rising 5 cents. The foregoing changes are reflected in the chart below.Other producers say they are continuing to evaluate their positions, but no movement had been seen from Chevron, Citgo, SK or Sunoco as this edition closed.
These base stock price increases come at a time when crude prices have again strengthened, and are in the mid-$70s per barrel. Some producers have commented on the pressure from rising crude costs, while others cite the still strong but lessening premium for vacuum gas oil. In the past week several refinery issues in the U.S. have been corrected, which has resulted in significant relaxation in spot gasoline prices. However, now that more refineries are back on line, concern regarding increased crude draws has driven crude prices even higher this week. Conversely, as more crude units are back on line, appetite for vacuum gas oil has weakened, resulting in a drop of over $3 per barrel from late last week to early this week.
In spite of the continuing imbalance in the crude and fuels markets, some base stock producers feel the latest increase has largely achieved balance in their economics. At the same time, however, it was stated that several factors could impact the market in the next few months, among them being additional refinery issues, crude costs and of course, the remaining threat of weather.
The delicate balances affecting these markets are reflected in their volatility. More than one producer has lamented how that volatility affects their ability to plan. Buyers are undoubtedly lamenting as well.
Crude closed at $74.13per barrel yesterday on the New York Mercantile Exchange, according to Bloomberg. That was $1.32above 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.