ExxonMobil issued price notices to its customers outlining plans to implement 15 cent-per-gallon increases on Group I and II+ base oils effective today, March 19, sources said. However, sources said ExxonMobil is again excluding its American Core Group I 100 and 150 solvent neutrals from this round of price activity, leaving those postings at levels last revised Nov. 29.
Rising energy costs and margins being perpetually squeezed are cited as the main justifications for the aforementioned price hikes, sources said.
These same factors also led to a spate of naphthenic increase announcements that reached the market this week.
San Joaquin said it will lift all pale oil prices by 20 cents/gal on Thursday, March 20. Ergon confirmed plans to raise its spectrum of naphthenic oils between 25 and 30 cents/gal on March 26. Cross Oil announced a 25 cents/gal across-the-board upward price adjustment, effective March 28. Nynas jumped on board with plans to raise its naphthenic base stock line-up by 25 cents/gal on April 1, and Calumet will also boost its range of pale oils by 25 cents/gal on April 4.
Base oils buyers, although understanding of the ongoing steep costs of production, are nevertheless reeling from the shock of seeing more price hikes so shortly following increases initiated earlier this month.
In related news, European sources said that ExxonMobil announced significant price hikes for key grades late last week in Northwest Europe. The majors initiative outlined increases of up to $150 per ton for SN 50, $110/ton for SN 100, $95/ton for SN 150, SN 600 and bright stock up by $80/ton – hikes roughly in the range of 27 cents to 35 cents per gallon.
Sources said that these higher prices were not without boundaries. In some cases, and depending on individual company circumstances, not all direct customers would feel the pinch of this entire round of price hikes immediately, while others will have 15 days after the official announcement before absorbing steeper prices, according to sources.
Given ongoing upward pressure on Brent crude prices and rising fuel costs in Europe, other producers were expected to announce price hikes, onlookers said. Sources also pointed out that unlike in the U.S., in Europe there are no posted prices, but rather most European business is concluded by using market prices.
The Federal Reserve cut interest rates three-quarters of a percentyesterday, March 18, which seemed to prompt a rally on Wall Street in late afternoon trade. The Dow Jones Industrial Average gained over 400 points, to closeat almost 12,400.
In the past several months, interest rate cuts have led to oil price rallies as investors have bought crude futures to hedge against inflation and the falling dollar. Also, oil futures are priced in dollars, which makes them cheaper for foreign investors as the U.S. dollar falls.
At the close of the Tuesday NYMEX session, front-month light sweet crude futures settled at $109.42 per barrel, up by only 67 cents per barrel from the week earlier, but $3.74/bbl higher than Mondays settlement.
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.