With crude shooting over$70 per barrel, players apprehensive about base oil price hikes had their suspicions confirmed this week. All naphthenic producers announced increases of up to 25 cents per gallon, and Flint Hills Resources raised its paraffinic postings by 10 cents to 15 cents per gallon.
Effective yesterday, Aug. 4, Flint Hills Resources increased its postings for 70 and 75HC grades by 15 cents/gal; 100 and 230HC rose 10 cents/gal; and 600HC climbed 15 cents/gal. Flint Hills markets half of the output of the 21,900 barrel per day API Group II Excel Paralubes refinery in Westlake, La. ConocoPhillips markets the other half of the refinerys base oil production.
A few sources speculated that the Flint Hills increase was more a catch-up from the previous round of price changes. There were no other reports of paraffinic price changes yesterday.
On the pale oil side, Ergon is increasing all its naphthenic prices by 20 cents to 25 cents/gal, effective Friday, Aug. 14. Ergon has about 16,000 b/d of pale oil capacity at its Vicksburg, Miss., plant, where a major upgrade is nearing completion.
Nynas also announced an across-the-board increase of 20 cents to 25 cents/gal on all naphthenic oils, effective Aug. 14. Nynas markets Lyondells 3,600 b/d Houston production and Valeros 2,400 b/d Three Rivers, Texas, output.
San Joaquin Refining said it will be equalizing prices across the board and removing any remaining discounts, resulting in changes ranging from plus-10 [cents] to plus-25 [cents/gal] effective Aug. 13. Capacity at San Joaquins Bakersfield, Calif., naphthenic refinery is 8,100 b/d.
Calumet, with 7,000 b/d of naphthenic production, most at its Princeton, La., plant, and Cross Oil, with 5,000 b/d in Smackover, Ark., both indicated plans to follow Ergons move, effective next week. Neither company had a specific effective date as of yesterday.
None of the naphthenic producers provided details on which grades would increase by specific amounts.
A few buyers are shopping for heavy neutrals, but they continue to find it difficult to source large volumes, and price indications are stiffer than buyers want to pay, sources said.
The upstream market has been very fickle. Crude prices have been swinging in a $3 to $6 per barrel range daily. Oil and energy prices are trying to find a trend, but fundamentals are difficult to assess, energy experts say.
At the close of the Tuesday, Aug. 4, NYMEX session, light sweet crude futures ended the day at $71.42 per barrel, a gain of $4.19 compared to the week earlier settlement at $67.23/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.