U.S. Base Oil Price Report


Motiva surprised the market this week, announcing that it will reduce its API Group II and Group II+ base oils between 45 and 65 cents per gallon. Ergon dropped all its naphthenic prices by 55 cents per gallon last week for all grades. Cross Oil and San Joaquin Refining also reduced prices.

The Ergon decrease, which was effective Jan. 19, was the first move by Ergon so far this year. Ergon had last issued a round of decreases for its pale oils on Dec. 18.

Both Cross Oil and Bakersfield, Calif.-based San Joaquin said they adjusted their naphthenic base oil prices within the last week to remain competitive with Ergon’s current move.

On Feb. 2, Motiva plans to knock off a whopping 65 cents/gal on its Star 3 and 4 grades, reduce its Star 6 by 55 cents, and lower Star 12 by 60 cents. In the Group II+ category, the producer will cut Star 5+ by 45 cents/gal. This stunning move follows quickly behind a recent adjustment Motiva made on Jan. 15, when it dropped its base stock prices between 20 and 40 cents/gal.

Despite a less-than-active start to 2009, a few suppliers said that demand is beginning to perk up, albeit slowly. But this subtle activity has injected a fresh dose of enthusiasm back into the market, they added.

Several sellers indicated that export demand had modestly improved and that sales were better than those recorded in late November, December and early January.

Some players have put fresh spot numbers at circa $2.05 to $2.20/gal FOB for light vis neutrals. Heavy neutrals are pegged around the $3.15 to $3.40/gal FOB range, and bright stock prices are near the $3.80 to $4/gal FOB mark. All spot values are subject to change depending on supplier and circumstances, given the volatility that is still apparent in both the domestic and offshore arenas, participants suggested.

Nevertheless, and despite the unsteadiness of the market, sources pointed out that the steep discounts that sellers had offered in November and December have largely disappeared now. They contend that producers (in general) are not in favor of extreme discounts to postings and that they have attempted to rectify the low spot price offers by adjusting posted prices over the course of the past several months.

In other news, Ergon confirmed that its Vicksburg, Miss., facility was down for a combination planned turnaround and expansion. The downtime will last for approximately five to six weeks. Ergon said that it had prepared inventory levels in advance of the scheduled shutdown, which commenced earlier this month. (For more details, see Ergon Readies for Expansion in this issue.)

The scheduled 45-day turnaround at Motivas Port Arthur, Texas, facility (the largest in the world at 40,300 b/d) is under way, having started around mid-month. A restart is slated for early March.

Cross Oil said that its 5,000 b/d Smackover, Ark., plant will be taken down for approximately four weeks during the month of February for maintenance work. Although various units will run at different times during the scheduled turnaround, Cross said it will lose some production of naphthenic oils. The company has prepared inventories in advance of the outage.

At the close of the Tuesday, Jan. 27, NYMEX session, front-month light sweet crude futures ended the day at $41.58 per barrel, a modest gain of 74 cents over the Jan. 20 close of $40.84/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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