U.S. Base Oil Price Report


U.S. base oil buyers are still coming to terms with the most recent round of price hikes initiated by key API Group I producers during the past week, when ExxonMobil, Citgo, Valero, Sunoco and Calumet all increased postings by a flat 20 cents per gallon across the board.

SK said it is increasing its Group III YUBASE 3, 4 and 6 grades by 20 cents/gal, and its YUBASE 8 by 15 cents/gal, effective today, April 30.

Ergon has joined the line-up of naphthenic producers that announced plans last week to raise all pale oil prices 20 to 30 cents/gal in early May. Ergon confirmed that it will boost all pale oils by 25 cents/gal and its paraffinic base oils by 20 cents/gal on May 2.

Meanwhile, consumers anticipate that major Group II producers will soon announce plans to push posted prices up, given prevailing high energy prices and increasingly balanced-to-tight supply positions alongside strong demand.

In fact, most consumers said that it has become difficult to find sizeable quantities of practically any neutral or pale oil grades on a spot basis. Moreover, they added that selling offers have advanced considerably in the past several weeks, in some cases as much as 50 cents/gal above quotes heard earlier in the month.

Light and mid vis neutrals are assessed on average in a range of $3.20/gal on the low end to as high as $3.50/gal, depending on supplier and location. Heavy neutral prices have firmed more dramatically in the past few weeks compared to the light ends. Sources said 500, 600 and 700 neutral grades are now being discussed in a spread of $4.10 to 4.30/gal, while bright stock values are quickly edging toward the $4 to $4.20/gal level, if not firmer in some cases.

A keen international base oil player said that the global market was frantic, and wondered how many base oil producers can survive if energy prices remain at these high levels.

The source suspected that several more U.S. facilities may be forced to shut down production by early-to-mid third quarter, or sooner, if raw material costs do not moderate. This is in addition to the recent news that Citgo will reduce production in Lake Charles, La., to levels only sufficient to meet its internal lubricants demand, along with Marathon alerting its customers last week that it will exit the base oils market by year-end.

This source pointed out that several exporting countries, including Russia, have reduced shipments to foreign destinations due to the steep costs involved in shipping. The weak U.S. dollar – although slightly firmer on Tuesday – was also indicated as contributing, at least in part, to setbacks in global base oil trading.

At the close of the April 29 NYMEX session, front-month light sweet crude futures settled at $115.63 per barrel, down $3.74 from the $119.37 close reported on April 22. As a point of interest, other Tuesday settlements for this month were April 15, $113.79/bbl; April 8, $108.50; and April 1, $100.98.

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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