U.S. Base Oil Price Report


The relentless climb in crude oil and transportation fuel costs opened the door for U.S. base oil producers to seek higher posted prices.

Within the past week, ExxonMobil, Flint Hills Resources, Citgo, Motiva, Sunoco, Calumet and Valero entered the market with news of increased prices. The hikes range from 15 cents per gallon to 25 cents per gallon and cover most paraffinic base oils. The bump-up in prices was directly linked to rising upstream costs, which were largely driven by crude at sustained levels around $100 per barrel for several weeks, sources said.

Soaring natural gas values were also pointed to as a driver which led to increase base oil prices. Natgas is a key element involved in the tallying of overall operational expenses. The recent run-up in natgas prices, currently at levels not seen since November 2006, left producers with little alternative but to pass on these costs, onlookers said. Natgas was last reported around $9.40 per million Btu.

On Monday, March 3, ExxonMobil upped postings on its line of Group I and II+ base oils by 15 cents/gal, sources said. The exception is its Group I solvent neutrals 100 and 150, which will remain unchanged. The last round of price hikes initiated by ExxonMobil began Nov. 29, when it raised prices 20 cents/gal across the board.

Also on Monday, Flint Hills Resources boosted its Group II 70, 75HC, 100HC and 600HC by 20 cents/gal. The company increased its 230HC by 17 cents/gal.

Citgo pushed up postings on its Group I solvent neutral 85, 100, 150 and 325 viscosities by 15 cents/gal. Heavy neutral 650 vis and bright stock postings went up 20 cents/gal. Citgos postings went into effect March 3.

On Tuesday, March 4, Motiva raised its Group II Star 3, 4 and 6 by 20 cents per gallon, Star 12 by 25 cents per gallon and its Group II+ Star 5+ by 22 cents per gallon.

Sunoco announced plans to increase its Group I line-up of base oils by 15 cents/gal across-the-board yesterday, March 4.

Calumet boosted all its paraffinic base oils by 15 cents/gal for Group I and II grades effective today, March 5.

Valero plans to hoist postings on all its Group I and II base stocks by 15 cents/gal tomorrow, March 6.

Rounding out the recent wave of price hikes in the naphthenic sector, Calumet announced that it will increase its pale oil prices by 15 cents to 20 cents per gallon. Grades lighter than 500 vis will go up by 20 cents/gal. Pale 500 through 750 will move up by 15 cents/gal, and grades heavier than 750 vis will jump by 20 cents/gal, effective March 11.

Overall market activity in both the paraffinic and naphthenic arenas continued at a steady pace, sources said. Customer orders are largely on track with forecasted volumes. However, demand was not deemed as robust as levels noted in years past, a few suppliers indicated. On the other hand, and depending on the consumption segment, requirements are exceeding some sellers expectations.

The recent stream of increases infiltrating the base oil market is being seen as necessary given soaring energy prices, acknowledged a few buyers. It is understandable that producers have no tolerance to compromise margins, one large player said. In fact, most consumers agreed that this round of price hikes is intended for margin management and is not reflective of a tight supply situation.

On Monday, futures shot up to near the $104 per barrel mark during intra-day trade, but retreated from that lofty level by the close.

On Tuesday, a weak economic outlook along with indications that OPEC will leave production targets unchanged at a time of year when demand declines tilted crude values to the downside, analysts said. According to Organization of Petroleum Exporting Countries President Chakib Khelil, OPEC will make no change to quotas when its meets in Vienna today, March 5.

At the close of the Tuesday, March 4 NYMEX session, the front-month light sweet crude futures price settled at $99.52 per barrel, a loss of $1.36 from the $100.88/bbl settlement reported on Feb. 26.

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.

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