U.S. Base Oil Price Report


News of fresh base oil price hikes swept through the U.S. market this week as crude oil values reached yet another new high at over $119 per barrel on Tuesday.

In the paraffinic sector, ExxonMobil, Citgo, Sunoco, Calumet and Valero issued price notices to their customers outlining plans to implement 20 cent-per-gallon increases on all base stocks, sources confirmed.

According to direct buyers, ExxonMobil raised all its Group I and II+ base stocks by 20 cents per gallon on Tuesday. Citgo and Sunoco said they plan to lift base oil postings by the same amount on Thursday, April 24. Calumet and Valero verified that they will follow suit, and boost all their posted prices by 20 cents/gal on Friday, April 25.

Steeply rising operating costs alongside depleted margins are being cited as the main justification for this round of price hikes, suppliers said.

These same upstream factors also led to a spate of naphthenic increase announcements that reached the market this week. Increases in the range of 20 to 30 cents per gallon are expected to be implemented between May 1 and May 8.

Cross Oil plans to raise all pale oils by 20 cents/gal on May 1. San Joaquin Refining will also hoist its range of naphthenics between 25 and 30 cents/gal on May 1. Calumet is targeting May 6 to push through an across-the-board 20 cent/gal increase on all its pale oil grades. Nynas said it will seek 20 to 25 cent/gal hikes on May 8. In the case of the movements by San Joaquin and Nynas, the level of increase is dependent on the viscosity grade, the companies said.

On Tuesday, crude values flirted with the $120 per barrel mark while natural gas prices edged higher toward the $11 per million Btu level, according to the NYMEX.

Vacuum gas oil values have inched up too the past several days. Low sulfur VGO was assessed around $2.95 to $2.98/gal and high sulfur was gauged to be about $2.85/gal.

Meanwhile, blenders and packagers are reeling from the news of more increases coming down the pike. The speed of base oil and additive price hikes is outpacing that of finished lubricants increases. Major blenders have pushed through hikes of around 5 to 9 percent, or an estimated 50 to 60 cents/gal, for late April and May implementation, while smaller blenders are seeking around 35 to 40 cents/gal in June. These projected finished lubricants price adjustments, however, pale in comparison to the levels of base stocks and additive hikes, several blenders pointed out.

Market watchers said that the weak U.S. dollar (now at all-time lows) continues to support steep oil prices. Most recently, the euro was worth $1.5997. Commodities such as oil are still attractive hedges to investors seeking alternatives against further drops in the currency, analysts suggested.

At the close of the April 22 NYMEX session, front-month May light sweet crude futures, which expire the same day, settled at $119.37 per barrel, a substantial gain of $5.58/bbl from the week earlier close at $113.79.

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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