U.S. Base Oil Price Report


This week, Sunoco issued a price decrease on its API Group I base oils of 40 to 50 cents per gallon,Chevron cut the posted pricesfor its Group II oils by 40 to 50 cents/gal, andExxonMobil has informed customers that it is marking down all Group I and II+ grades by 50 cents/gal. On the naphthenic side, Ergon plans to lower all grades by 50 cents/gal, while San Joaquin will reduce prices by 30 cents/gal this week.

On Dec. 11, Sunoco reduced its solvent neutral 70 vis by 50 cents/gal, while pushing down all other neutrals by 40 cents/gal. The company did not adjust its bright stock, which remains unchanged at $5.21/gal.

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ExxonMobil has lowered the prices for all its Group I and Group II+ postings by 50 cents/gal effective tomorrow, Dec. 18, according to sources.

Chevron said yesterday that it willcut the posted prices on its Group II 100R by 45 cents/gal, the 220R by 50 cents/gal, and the 600R by 40 cents/gal. Chevron’s cuts will take effect Friday, Dec. 19.

Ergon will drop prices by 50 cents/gal on all its pale oils Thursday, Dec. 18. San Joaquin plans to chop pale oil prices by 30 cents/gal on Monday, Dec. 22. Other naphthenic producers indicated that they would follow, although they plan to wait until January to make formal announcements.

Heading into the year-end holiday season, spot activity has come to a grinding halt in both the paraffinic and naphthenic sectors, sources lamented.

Sellers said that even regular day-to-day business transactions have subsided and will not likely pick up until early next year. One source said that whether demand spikes in January or February will depend on the economy showing some improvement.

A few suppliers said they managed to unload a few rail cars and barges of various naphthenics during the past week, which helped reduced top-heavy inventory levels. But additional spot movements this month are highly unlikely, said the seller.

Prices associated with these transactions, around $2 to $2.10/gal for naphthenics and some paraffinics, are considered unrealistic. Players say that these price indications are not necessarily representative of the overall market. Some sellers assess the real market to be in the low to mid $3/gal range for both naphthenics and some paraffinics. Bright stock values and a few other heavy vis grades could be pulling in higher prices above $4/gal, they added.

However, December is typically a month when producers offer rock-bottom prices in efforts to move product. These deeply slashed year-end trades are frequently referred to as fire sales, and prices can be more than $1/gal lower than prices linked to regular ongoing or contractual business.

In upstream news, OPEC meets today in Algeria to discuss expanding supply cuts. Some analysts are expecting ministers from the Organization of the Petroleum Exporting Countries to agree to cut output by up to 2 million barrels per day.

Prices for light sweet crude have been drifting lower for several months. More recently, oil values have moved down to around the $40 per barrel level, but on Tuesday they spiked above $46/bbl during intra-day trade. This mid-$40s range places oil prices at levels seen four years ago. Some energy experts, however, are speculating that the oil price trend could reverse, and values could start to creep higher in coming months. This remains to be seen, given the desperate economic situation now creeping throughout all industries in all countries.

At the close of the Tuesday, Dec. 17, NYMEX session, light sweet crude futures ended at $43.60 per barrel, a gain of $1.53 over the settlement reported a week earlier at $42.07.

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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