Following a daring price move by Sunoco a week ago, other U.S. base oil producers stepped out with increase initiatives this week, on the back of fast-rising upstream costs and squeezed margins.
ExxonMobil, the usual market leader, said it is raising posted prices on its API Group I and II+ grades between 13 and 17 cents per gallon effective tomorrow. Sources close to the company said the major base oil producer is responding to margin issues. Flint Hills and Calumet also announced posted price hikes for their Group I and II grades, ranging from 5 to 15 cents per gallon.
ExxonMobil is upping SN 100 by 13 cents/gal, mid and heavy neutrals (SN 200 to 600) by 15 cents/gal, and bright stock by 17 cents/gal. Its Group II+ paraffinic grades are going up by 13 cents/gal. No change is reported for ExxonMobils SN 150.
Last Thursday, Nov. 1, Flint Hills increased its light vis 70 and 75 HC by 5 cents/gal, 230 HC went up 10 cents/gal, and 600 HC went up 10 cents/gal. Flint Hills 100 HC posting was unchanged.
In the Calumet stable, Calpar 40, 60 and 80 grades are moving up 5 cents/gal, Calpar 100 rises 13 cents/gal, and Calpar 150, 325, 700 and bright stock goes up 15 cents/gal, effective Nov. 9.
Despite these posted price hikes, traders and buyers confirm that there are spot offers available at around $2.25 to $2.30 per gallon FOB for light vis grades domestically, Group I or II. Offers for export for the same grades were reportedly $680 to $700 per metric ton, FOB. Several suppliers said they refuse to participate in this activity, calling these offers below-market. They added that crude oil costs more than these purported aggressive offers for neutral 100 to 150.
In the naphthenic sector, San Joaquin Refining is raising all its pale oils by 15 cents/gal effective Nov. 12, and Calumet said it plans to increase the price of all its naphthenic oils, including transformer oils, by 15 cents/gal from Nov. 20. Sustained crude values over $95 per barrel is the main reason for these upward adjustments, said suppliers. Demand is steady, with inventory positions deemed balanced.
Energy analysts say there is extreme volatility in the market. On any given day, oil prices can swing up or down an average $3 to $4 per barrel. But in general, the trend is moving higher, with crude values targeting $100 per barrel before the end of the year, or sooner, they added.
Every time we have a strong move higher, we see speculators book some of their profits, said a commodity analyst. When this happens other speculators and investors see this as a buying opportunity, and we move the next leg higher. This market is being characterized by extreme volatility.
Hedge-fund managers and other large speculators increased their net-long positions in New York crude-oil futures in the week ended Oct. 30, according to U.S. Commodity Futures Trading Commission data. Long positions are bets that prices will rise.
At the close of the Tuesday NYMEX session, light sweet crude ended the day at $96.70 per barrel, a staggering gain of $6.32/bbl over the week earlier close at $90.38/bbl.
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.