U.S. Base Oil Price Report


ExxonMobil announced plans to lower its American Core 100 viscosity (Group I) base stocks by 40 cents per gallon, effective August 23. Tuesdays announcement stunned many market players as they did not anticipate such a significant decrease would emerge. They were left wondering if another price announcement might follow to include other light viscosity grades. Direct buyers of the major producer indicated that the adjustment was in response to competitive activity for solvent neutral 100. A few others speculated that the price drop was ExxonMobils attempt to bring the posting more in line with actual market pricing.

On the heels of the ExxonMobil news, Chevron informed its customers that it would raise Group II base oil postings. Neutral 100 vis grade will go up by 5 cents/gal, 220 vis will gain 10 cents/gal, and 600 is to increase by 15 cents/gal, effective August 23. Chevron had been the only producer that did not follow a round of price hikes in July by virtually all other producers.

Sources said that the ExxonMobil 16,500 barrel per day Baton Rouge, La., facility was taken off-line during the past week for an extended planned outage; its due back on stream in late September. Sources also said that the companys 21,500 b/d Baytown, Texas, lubes plant would be brought down for scheduled maintenance in October, but details were vague. Some reported that it would be a short downtime involving only one unit. Whether the ExxonMobil 12,500 b/d Beaumont, Texas, plant would be shut down during the fourth quarter for a scheduled turnaround, as previously reported, was not clear.

In other industry news, with the threat of Hurricane Dean having lessened in the past few days for U.S. Gulf Coast refiners, the energy complex settled back into a more relaxed mode – at least for the near term. However, another storm is brewing in the Atlantic, which could raise another streak of high anxiety for producers located in Texas and Louisiana.

As the oil and gas markets calmed, so did the base oil arena. Overall activity, which spiked momentarily in the wake of a possible hurricane last week, returned back to a fairly lackluster pace. Suppliers said that orders were slow, but reiterated that this was not unexpected for the latter part of August.

In the meantime, buyers said they were trying to run down inventories first while hesitating to beef up stocks ahead of the fall season. Most consumers were under the impression that availability was more than ample despite a spate of downtimes planned for the fourth quarter. A number of buyers were also convinced that even if the U.S. Gulf Coast might endure a damaging storm in the coming months, supply would still be sufficient due to existing high inventory positions.

Nevertheless, both sides were taking necessary precautions for any type of weather-related scenario and/or unexpected mechanical issues that could possibly play out before the end of the year at key facilities.

At the close of yesterday’s NYMEX session, light sweet crude settled at $69.47 per barrel, shedding $2.91/bbl from the August 14 close. The September futures contract expired with October becoming the front month. October ended the session at $69.57/bbl.

Carolyn L. Green, based in Houston, can be reached at CarolynLGreen@gmail.com.

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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