U.S. Base Oil Price Report


Consumers in the U.S. base oil market were inundated with price decrease notices over the past several days. Price cuts from ConocoPhillips, Flint Hills Resources, Valero, Sunoco, SK and Calumet followed announcements last week from Motiva, ExxonMobil and Chevron.

All lowered posted prices from 20 cents per gallon to 85 cents/gal for their API Group I, II and III base stocks.

On Thursday, March 26, ConocoPhillips reduced its Group II lineup by 30 to 75 cents/gal. The 70 vis and 80 vis grades shed 30 cents/gal, 110 vis lost 40 cents/gal, 225 vis went down 50 cents/gal, and 600 vis dropped 75 cents/gal. ConocoPhillips also said its Group II+ and Group III Ultra-S base oils prices tumbled by 55 cents/gals. Lower prices were a result of market conditions, the company added.

Effective Monday, March 30, FHR adjusted its spectrum of Group II base oils down by 35 to 77 cents/gal. On the light end, 70HC and 75HC eased by 35 cents/gal, while 100HC fell 40 cents/gal. The company pushed down its 230HC by 50 cents/gal and dropped the 600HC by 77 cents/gal.

On the same day, Valero also revised its Group I and II grades by 20 to 85 cents/gal. The company reduced it SN 100 by 20 cents/gal, SN 165 by 50 cents/gal, SN 500 and 700 by 80 cents/gal, and sliced 85 cents/gal from its bright stock price. Valero cut its Group II 200 neutral by 60 cents/gal.

Sunoco shifted its Group I base stocks lower by 30 to 85 cents/gal on March 30. SN 70 eased by 30 cents/gal, SN 148 went down by 50 cents/gal, SN 250 lost 60 cents/gal, SN 500 shed 80 cents/gal, while the bright stock price was knocked down by 85 cents/gal.

SK shaved an even 55 cents/gal off its Group II+, Group III and III+ Yubase grades, also effective Monday, March 30.

Calumet held out until today, April 1, to lower prices. The company pushed down its Group I and II base stocks by 30 to 85 cents/gal. In the Group I category, 60 vis fell by 30 cents/gal, 700 vis dropped 75 cents/gal, and bright stock plunged 85 cents/gal. In the Group II category, 80 neutral went down 30 cents/gal, 100 and 150 neutrals slumped 40 cents/gal, and 325 neutral edged lower by 55 cents/gal.

Motiva gave nearly two weeks notice of its price cuts taking effect today, chopping its Group II and II+ postings by 30 to 75 cents per gallon. As reported last week, effective today, April 1, Motiva pushed down its Group II 70 vis by 30 cents/gal; 100 vis by 40 cents/gal; 220 vis by 55 cents/gal; and 600 vis by 75 cents/gal. It trimmed its Group II+ Star 5 posted price by 45 cents/gal. These Motiva posting changes are reflected for the first time in the price chart below.

Demand continues to improve week on week for both paraffinic and naphthenic grades, although current volumes remain below last years take, suppliers said. Inventories, however, are still fairly top-heavy for a number of grades, which is one reason why producers initiated lowered prices, buyers surmised.

In upstream news, crude oil values fell below $50 per barrel this week, largely on the news that the U.S. government rejected restructuring plans from embattled automakers GM and Chrysler.

Oil prices had been in rally mode since the latter part of February, but they lost steam as the end of the third quarter approached. Supply is at a 16-year high, and demand for crude oil continues to shrink amid rising unemployment. These elements could not sustain prices at or over the $50 per barrel level, analysts said.

Some energy experts expect oil values to ease to around $45/bbl later in the week unless the stock market takes another large upward leap.

Last week the U.S. government said crude storage facilities were brimming with more oil than seen in 16 years. Combined with the strategic petroleum reserve, the nation now has 1.05 billion barrels of oil in storage, enough to fuel roughly 44 million cars for a year.

Just two weeks ago as the Organization of Petroleum Exporting Countries ministers gathered in Vienna, Austria, there was still talk of $70/bbl oil. On Monday Qatar’s oil minister suggested OPEC members may be facing a new reality because of widespread recession. Abdullah bin Hamad al-Attiyah said he was “OK” with crude prices around $50/bbl for 2009 and was “trying to be more pragmatic” regarding the global crisis and its effects on oil prices.

At the close of the Tuesday, March 31, NYMEX session, front month light sweet crude oil futures ended the day at $49.66 per barrel, a loss of $4.32 from the week earlier settlement at $53.98/bbl.

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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