U.S. Base Oil Price Report


An increasingly tight U.S base oil supply scenario, particularly on the naphthenic side, has some buyers searching all corners for product this week. Given the more challenging supply/demand conditions currently unfolding, Nynas stepped out with plans to raise naphthenic prices by up to 20 cents per gallon.

Nynas advised its customers that heavier pale oils (500 SUS and higher-vis grades) would be increased 20 cents/gal, effective Sept. 8. Nynas also stressed to its core accounts the need to update their forecasted requirements for the remainder of the year, as the company expects to have no surplus material for spot opportunities.

Additionally, and on an account-by-account basis, Nynas plans to make upward price adjustments where necessary on light-end grades (less than 500 SUS). These measures are said to reflect current market circumstances.

Although not an across-the-board increase, San Joaquin is also planning to advance a number of its low-end customer prices by 10 cents to 15 cents/gal, on Sept. 4. The company said that it will uphold its current posted prices at unchanged levels through the remainder of this month.

Calumet and Cross also said that their current price offers are on the rise, and in some cases by amounts similar to the Nynas increase. They too will adjust prices higher for existing low-end margins accounts, and have removed any temporary voluntary allowances (TVAs) that may have been in play. All new business is being quoted at steeper prices due to lessened availability amid increased demand on many naphthenic cuts.

Traders and other spot buyers say that it is very difficult to find sufficient volumes of a number of pale oil cuts, adding that heavier grades are unattainable for at least the next few months. They also confirmed that sellers offering prices have risen considerably during in the last week or so.

Producers added that offers to the spot market will continue to escalate in price, in an attempt to discourage new business. Suppliers attention is now focused on securing inventories to cover the necessary requirements of regular ongoing and contractual buyers for the coming months.

Pale oil prices have firmed, with the lowest numbers now pegged to be around the $2.50 per gallon mark for certain grades. But sources said that more and more activity is or will soon be concluded nearer the $2.75 to $3.00/gal FOB level, depending on grade and end use.

Increased demand from China, India, Mexico and South America has also helped to tighten naphthenic oils as well as support higher prices, sources reiterated.

Meanwhile, the paraffinic sector maintained a rather low profile, as typical for late summer and especially ahead of the approaching Labor Day weekend. Both the buy and sell sides said that business was steady and at firm price levels. The increases implemented by all major paraffinic refiners in mid-July, which averaged 25 cents to 35 cents/gal, are holding firm.

But as crude values have trended higher in the six weeks since that last round of issued hikes, some market players speculate that paraffinic postings could soon be amended upward, due to poor operating margins on the production side. Also, demand is viewed to be generally improved for many grades, alongside balanced-to-tight stock positions. Whether beefier paraffinic prices transpire in coming weeks, remains to be seen.

At the close of the Tuesday, Sept. 1, NYMEX session, front-month light sweet crude futures ended the day at $68.05 per barrel, a hefty loss of $4 compared to the Aug. 25 settlement at $72.05/bbl.It is worth noting that crude prices have regularly bounced back and forth between $68 and $72 over the last five weeks of trade. On Aug. 24, front-month futures prices hit the $75/bbl mark before settling just a little lower.

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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