U.S. Base Oil Price Report


High crude values prompted a number of U.S. base oil producers to issue price hike announcements this week. Increases of 25 cents per gallon to 30 cents/gal have been proposed for both paraffinic and naphthenic cuts, with effective dates commencing next week.

Valero told its customers that it would be upping all its light, mid and heavy vis neutrals by 30 cents/gal, and bright stock by 25 cents/gal on Nov. 2. The key factor for this price move was rising feedstock costs, which have escalated steadily since June, the company said.

Valero is the only paraffinic producer to announce increased prices so far this week. Base oil market watchers are somewhat baffled that no other suppliers have stepped out with price hikes.

In the naphthenic arena, news of price initiatives was more prolific than on the paraffinic side.

San Joaquin Refining said it will push up all naphthenic oils by 25 cents/gal on Nov. 3. Ergon, Calumet and Cross Oil will hoist pale oil prices by 25 cents/gal across-the-board on Nov. 6. And Nynas is raising all its naphthenics by 25 cents/gal effective Nov. 9.

All producers agree that steeper operating costs have lead to their recent decisions to increase prices. They also concur that steady-to-strong demand for a number of grades has lent support in their pursuit for higher prices.

In many cases, inventory positions on the production end as well as consumers stock levels are low. More and more frequently, buyers seeking additional volumes of heavy vis paraffinic and/or naphthenic cuts over and above prescheduled or contracted allotments are finding it frustrating that surplus product does not exist. Suppliers speculate that it will likely be after the first of the year before an improvement in supply is seen.

Looking upstream, with few exceptions crude oil values have remained above $70 per barrel since the start of August. Beginning earlier this month, crude began another run-up, peaking at $82/bbl late last week, before easing back to around the $77 to $79/bbl level.

Most analysts and energy experts agree that crude futures will likely continue to trade in similar territory as seen in recent weeks for the near future, given a weak U.S. dollar compared to other foreign currencies.

At the close of the Tuesday, Oct. 27, NYMEX session, light sweet crude futures ended at $79.55 per barrel, a modest gain of 46 cents compared to the week-earlier settlement at $79.09/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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