U.S. Base Oil Price Report


API Group II and III base oil producers jumped on the band wagon this week, joining major Group I producers that had announced price hikes in April. The latest wave of posting increases ranges from 18 to 30 cents per gallon.

Motiva lifted its Star 3 (70 viscosity) by 20 cents/gal and raised Star 4 (105) by 25 cents/gal. Star 6 (220) and Star 12 (600) moved up by 20 cents/gal. Motivas Group II-Plus Star 5+ (100) jumped by 25 cents/gal. All increases were effective Tuesday, May 6, the company said.

Chevron increased its posted prices effective today, May 7. The company lifted its 100R by 30 cents/gal, raised 220R by 18 cents/gal and hiked 600R by 20 cents/gal. Chevron said the main reason behind the upward adjustments was exorbitant raw material costs. A need for Chevron to maintain the historical price differential between the U.S. Gulf and West coasts was also addressed, sources said.

ConocoPhillips plans to push up its 70N, 80N and 110N by 25 cents/gal, while 225N and 600N will rise by 20 cents/gal, on Thursday, May 8.

On behalf of the Korean refiner S-Oil, ConocoPhillips confirmed that all Group III Ultra-S grades increased by 20 cents/gal in the U.S. market on Friday, May 2.

Apart from the posted price activity seen over the past few weeks, spot values for all paraffinic and naphthenic oils continue to drift higher. The firmer price trend is largely bolstered by rising raw materials, but robust demand has also lent much-needed support to producers in their quest to raise offers regularly, sellers said. Moreover, producers report that there are negligible amounts of surplus of neutrals or pale oils.

Sources pointed to heavy neutrals and bright stock as being particularly tight, with selling prices leaping well over the $4 per gallon mark. Some players said that $4.35 to $4.45/gal for 600 and 700 neutrals is indicative of current prices, up about 10 cents in a week.

Bright stock values were heard in a wide range, but with most activity concentrated in a spread of $4 to $4.20/gal. Some business was still being concluded in the high-$3s, but these numbers were quickly disappearing and not considered to be fully representative of the overall market, sources said. In fact, a few suppliers suggested that bright stock offers have already elevated, or will do so soon, to around $4.30 to 4.50/gal due to increasingly scant availability.

Naphthenic prices have also trended higher with heavy pale oils now valued in the mid-$3/gal area, if not firmer, a few sources said. Pale 2000 was heard in the $3.45 to $3.55/gal region, depending on application and producer. In a few cases, lower prices for Pale 2000 were still available for this month, but would move up 15 to 20 cents/gal for June deliveries, on par with the aforementioned price band.

Sources said that recent production issues at Ergons 11,300 b/d Vicksburg, Miss., facility and a now-completed 10 day turnaround at Valeros 2,600 b/d Three Rivers, Texas, plant contributed to the tight naphthenic situation. Suppliers added that strong demand for most grades has also led to an overall snugger supply scenario.

According to a report issued by a Wall Street analyst earlier this week, crude oil may rise to between $150 and $200 per barrel within two years as growth in supply fails to keep pace with increased demand from developing nations. The report highlighted the possibility of $150 to $200 per barrel being increasingly likely over the next six to 24 months, though predicting the ultimate peak in oil prices as well as the remaining duration of the up-cycle remains a major uncertainty.

At the close of the Tuesday, May 6 NYMEX session, front-month light sweet crude oil futures settled at $121.84 per barrel at the close. This is a steep gain of $6.21 over the April 29 settlement at $115.63. During intra-day trade yesterday, futures prices shot up near the $123/bbl mark.

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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