U.S. Base Oil Price Report


In what appears to be pulling out all the stops, ExxonMobil, Chevron and Motiva told customers they are significantly lowering posted prices by as much as 85 cents per gallon, while Calumet adjusted its API Group II postings downward by 21 to 47 cents/gal.

U.S. base oil buyers welcomed the unexpected and surprising news with opened arms, saying that these decreases were timely and would likely help stimulate sluggish demand.

According to its customers, ExxonMobil shaved 40 to 85 cents per gallon off its lineup of base oils effective today, March 25. In the Group I category, SN 100 shifted down by 40 cents/gal, SN 150 went down 50 cents/gal, SN 275 and SN 330 lost 60 cents/gal. The more astonishing reductions included SN 600, which fell by 80 cents, while bright stock dropped a whopping 85 cents/gal. ExxonMobils Group II+ postings were cut by 55 cents/gal.

Chevron also jumped into the fray and alerted its customers that it will knock 40 to 75 cents/gal off its Group II postings. The company will lower its 100 vis by 40 cents/gal, 220 vis by 50 cents/gal and 600 vis by 75 cents/gal effective Monday, March 30. The company said that these revisions are in keeping with current market conditions.

Motiva stepped out with plans to chop its Group II and II+ postings by 30 to 75 cents per gallon. The catch, however, is that these decreases will not go into effect until April 1, so the price table below does not reflect the changes. Motiva plans to push down its Group II Star 3 (70 vis) 30 cents/gal; Star 4 (100 vis) 40 cents/gal; Star 6 (220 vis) 55 cents/gal; Star 12 (600 vis) 75 cents/gal. The company said it will trim its Group II+ Star 5 posted price by 45 cents/gal. These changes will be reflected in the April 1 price chart.

Calumet adjusted its Group II postings downward by 21 to 47 cents/gal on Friday, March 20. The company said the postings had drifted out of line during the past year compared to other producers postings. Calumet revised its Calpar 80 down by 47 cents/gal; Calpar 100 moved lower by 33 cents/gal; Calpar 150 dropped 43 cents/gal; and Calpar 325 slipped 21 cents/gal. The company did not realign its Group I postings.

Buyers said that producers lowered postings to bring them in line with global price ideas and to help narrow the arbitrage for import cargoes into the United States from Europe and Asia. These reductions were also in response to an over-supply situation, as most U.S. producers have beefy inventory positions alongside not-so-dynamic demand.

There have been rumors suggesting that a few U.S. suppliers have exported cargoes comprised of a mix of grades at extremely low price levels in the last few months. Whether this trade activity could continue remains to be seen, sources said.

On the domestic front, consumers foresee other producers dropping prices over the course of this week and into the next. They speculated, however, that once this round of decreases has been completed, it is uncertain if more price cuts could emerge in the near future due to higher feedstock costs.

Industry participants believe these steep reductions, coupled with established volume discounts between contract supply partners, have now placed base oil prices at fairly low points and could challenge producers profit margins going forward. Crude oil values have zipped up to the mid $50s per barrel. Also, for integrated refiners, vacuum gasoil (VGO) can be more profitably used for making transportation fuels than base oils.

In upstream news, a stronger U.S. dollar helped pull down crude oil prices on Tuesday, halting a week of gains as markets brace for possible news of growing crude stockpiles.

After making steady gains all last week, benchmark crude front-month futures values rose to new highs for 2009 of almost $55 per barrel this week. Crude prices were last seen in the mid $50/bbl range in November.

At the close of the Tuesday, March 24, NYMEX session, light sweet crude futures settled for the day at $53.98 per barrel, up $4.82 compared to the $49.16/bbl close reported one week ago.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

Related Topics

Base Oil Reports    Base Stocks    Market Topics    Other