U.S. Base Oil Price Report


Motiva lowered posted prices for several base stocks on August 24. The major producer dropped its Group II Star 4 105 viscosity by 22 cents to $2.84 per gallon. The company also discounted its Star 12 600 vis by 15 cents to $3.46/gal and reduced its Group II+ Star 5+ by 10 cents to $3.40/gal. Other Motiva posted prices were unchanged.

The reasoning behind the adjustments was not confirmed by the company, but base oil consumers indicated that it was Motivas response to the dramatic action taken by ExxonMobil last week. ExxonMobil cut its American Core 100 viscosity (Group I) base stocks by 40 cents/gal on August 23.

On the same day, Chevron announced that it was raising its Group II West Coast postings in order to maintain the historical differential between the U.S. Gulf and West Coasts. Chevrons neutral 100 vis grade went up by 5 cents/gal, the 220 vis rose 10 cents/gal, and its 600 climbed 15 cents/gal,

Other producers, including Citgo, Sunoco, Calumet and ConocoPhillips, said they are still contemplating market dynamics and are not prepared to follow the ExxonMobil or Motiva price movements.

Valero said that it has suspended posting its East Coast prices for the time being, given the uncertainty in the market. The company anticipates issuing new postings when the market calms.

Despite the befuddled price situation in the paraffinic arena, the early-August increases of approximately 10 cents/gal for all pale oils are holding, suppliers said. Sustained demand amid fairly balanced inventories has helped keep prices firm on the naphthenic side.

At the close of the Tuesday NYMEX session, light sweet crude ended the day at $71.73 per barrel, a gain of $2.16/bbl from a week earlier, but down 24 cents from the Monday close. Traders said that shrinking credit issues alongside the turmoil on Wall Street have stymied the real economy. Just how much will become clearer when the August economic data reports are released in another few weeks, said an economist from Wachovia Corp.

Traders are also awaiting petroleum inventory data, due out today from the Energy Information Administration. Analysts expect to see a 1.8 million barrel decline in gasoline stockpiles. This is on top of a huge 5.7 million barrel draw a week earlier, and they project a drawdown of 800,000 barrels of crude.

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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