U.S. Base Oil Price Report


Chevron is reducing API Group II posted prices. The major will adjust only two postings, dropping its 100R by 20 cents per gallon to $3.05/gal and lowering 600R by 10 cents to $3.70/gal, effective today. This action came close on the heels of increases the company pushed through just under a month ago. Chevron said the adjustments are necessary to retain the historical price differentials between the U.S. Gulf and West Coasts.

Calumet also lowered its Group II Calpar 100 vis posting by 18 cents to $2.94/gal FOB Shreveport on Monday. The company followed major producers who had reduced postings in August. Valero has yet to join in the latest round of Group II activity.

Price movements have been common this summer, first moving up and then down, amid concerns about volatile raw material costs and questionable demand. The most dramatic change so far was the ExxonMobil decision to reduce its Group I 100 vis by 40 cents per gallon. The drop was so significant that other Group I producers have yet to follow suit almost a month after the surprise announcement reached the market in late August. Most Group I producers remain on the sidelines while still contemplating market dynamics.

In the meantime, natural gas prices have inched up to well over the $6 per million Btu level, and crude values have soared to new highs at over $81 per barrel, causing much distress among base oil producers as they watch operating costs rise daily, sources pointed out. Demand is deemed steady, but not robust enough to offset high inventory positions. Although a spate of planned outages is expected to tighten base oil supply in coming months, some players said that there is and will continue to be ample availability through year end.

In the naphthenic arena, San Joaquin Refining announced that is will boost prices by 10 cents per gallon for all grades except pale 60 and transformer oils, effective Sept. 24. Other pale oil producers are undecided if they will follow the SJR move. Sources agreed that overall demand remains healthy, but whether a fresh price hike can be sustained is uncertain at this juncture, since a round of increases was pushed through in early August.

On September 13 Hurricane Humberto slammed into the Texas coastline, causing three refineries based in Port Arthur to shut down after losing power. (The National Hurricane Center reported that “no tropical cyclone in the historic record has ever reached this intensity at a faster rate near landfall.”)

The three Port Arthur refineries involved are Valero, Motiva and Total, which make up 10.4 percent of the total crude capacity of Gulf Coast refineries. Authorities said that the encumbered refineries should be up within the week.

The only base oil refinery impacted is the Motiva facility. However, most participants believe that this particular outage will not lead to much disturbance since U.S. base oil inventories are presently well stocked.

Following last Thursdays hurricane strike and subsequent power loss, the Motiva plant experienced a gas leak on Sunday.

Yesterday Royal Dutch Shell PLC said the process of restoring operations at the 285,000 barrel per day Port Arthur oil refinery has started. The Motiva Port Arthur Refinery has restored most of the power to the facility. Safety continues to be the number one priority as Motiva continues to work as quickly as possible to restart production, Shell said in a statement.

At the close of the Tuesday NYMEX, light sweet crude settled at $81.51 per barrel, a gain of $3.28/bbl over the September 11 close.

Carolyn L.Green, based in Houston, can be reached directly 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.

Related Topics

Base Oil Pricing Report    Base Stocks    Market Topics    Other