It was another action-packed week in terms of price movements in the U.S. base oil arena. A string of refiners including ExxonMobil, Citgo, Sunoco, Calumet and Valero announced plans to raise all paraffinic base stock postings by 25 cents per gallon, while Chevron, in a double whammy, added 55 to 68 cents per gallon to its postings.
Late yesterday, multiple sources said that Motiva has announced an allocation program of 85 percent to 100 percent, depending on grade. Motiva could not be reached for confirmation at press time.
Market players were stunned when ExxonMobil stepped out late last week with yet another fresh price initiative of plus 25 cents/gal for all paraffinic API Group I and II+ grades, effective Monday, June 2. This round of increases came quickly on the heels of hikes that the company pushed through just under two weeks ago, on May 22, of 15 to 30 cents/gal on all grades.
Sunoco promptly jumped on the band wagon and said that it would also raise its line-up of paraffinic grades by 25 cents/gal today, June 4.
Valero and Citgo followed suit, and both producers plan to add 25 cents/gal to all their posted prices on Thursday, June 5.
Calumet announced a 25 cents/gal increase for all its paraffinic base oils effective Friday, June 6.
Meanwhile, to catch up to previously announced hikes over the past few weeks, Chevron raised its Group II neutrals last Friday, May 30, lifting its 100 vis grade by 38 cents/gal, N 220 by 30 cents/gal and N 600 by 35 cents/gal. (Chevrons previous posted price move took place on May 7, when the company increased Group II postings by 18 to 30 cents/gal.)
In a double-whammy, the West Coast producer said yesterday that due to extreme market circumstances it will increase its N 100 another 30 cents/gal, add 25 cents to its N 220 and apply 25 cents/gal to N 600, effective Friday, June 6. In this writers experience, Chevron is the only company to have ever adjusted postings twice within a one-week period.
Sources said the key impetus supporting producers actions to raise postings were high vacuum gas oil values of roughly $135 to $138 per barrel, or about $3.30/gal for low sulfur VGO and $3.22/gal for high sulfur VGO. Also, tight base oil supply combined with robust demand for all grades lent added support to push prices higher.
VGO is used as a key raw material for integrated refiners to enhance their production of high-value transportation fuels such as gasoline, jet and diesel. Currently, diesel fuel values are in the region of $3.74 to $3.78/gal at the rack (before taxes). Apparently there is no relief expected in these steep fuel prices either, given the high demand and short supply presently seen in the market, traders say.
Crude oil prices meanwhile have subsided from their record high levels of around $135 per barrel reached about two weeks ago. Oil prices are now hovering around $124 to $126/bbl. Energy analysts, however, still do not have a clear indication whether values will move lower or head back up. And softer crude prices do not necessarily mean that gasoline and diesel prices will moderate. As mentioned above, diesel values are expected to remain firm.
At the close of the Tuesday, June 3, NYMEX session, front-month light sweet crude settled at $124.31 per barrel, down $4.54 from the previous weeks close $128.85.
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.