U.S. Base Oil Price Report


ConocoPhillips announced late last week that it lowered two of its API Group II posted prices. Neutral 100 dropped by 18 cents per gallon to $2.84/gal and N600 moved down by 10 cents/gal to $3.59/gal.The changes were effective August 31.

Group I and III producers, as well as a few Group II producers, remain on the sidelines while monitoring market developments. Most suppliers still wonder why ExxonMobil on Aug. 23 opted to reduce its posted price for only one grade – 100 vis – when market prices are seemingly lower for most cuts.

The same bemused sentiment is applied to the recent posted price changes presented by Motiva and ConocoPhillips; why were only two grades discounted? sources pondered.

The market now waits and anticipates what could be forthcoming in terms of price activity. Demand is expected to pick up in the coming weeks, and that could help stabilize prices, a few observers said. This depends, however, on raw material costs, and whether blenders and end users opt to deplete base oil inventories first before restocking.

Activity is not all gloom and doom as buying interest remains healthy in the naphthenic sector. Orders are robust, and prices have not faltered since producers pushed through an estimated 10 cents per gallon hike in early August. Strong demand for pale oil 100 vis has helped sustain prices at circa $2.90 to $3.05 per gallon. Values for 60 vis pale rested well over $3.25/gal and in some cases nearer the $3.50 to $3.60/gal level.

U.S. export business was slow albeit steady, one trader said. A number of cargoes consisting of heavy neutrals and/or bright stock were recently sold into Africa. Associated prices could not be confirmed, but the deals were thought to have been steeply discounted, although at levels competitive with FOB offers ex-Europe.

At the close of the Tuesday NYMEX session, light sweet crude settled at $75.08 per barrel, a gain of$3.35 per bbl from the week-ago close.

Energy analysts said that oil and gas futures rose on expectations that the hurricane season will intensify and that OPEC will not boost production when it meets next week.

Hurricane Felix strengthened to a Category 5 storm early Tuesday just before slamming into Central America near the Nicaragua-Honduras border.

Fortunately, hurricanes Felix and Dean have largely spared oil and gas infrastructure in the Gulf of Mexico, according to market watchers. But some weather forecasts predict that at least six more hurricanes are likely this season, and at least three could be a serious threat to the U.S. Gulf Coast area.

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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