Three API Group I and II base oil producers jumped on the band wagon this week, joining the other major paraffinic producers that decreased prices in recent weeks. This latest wave of cuts ranged from 20 to 65 cents per gallon.
Effective Feb. 6, Chevron knocked 40 to 55 cents/gal from its Group II posted prices. The company pushed down its 100R by 55 cents/gal, shaved the 220R posting by 40 cents/gal and chopped 600R by 50 cents/gal. Chevron said the main reason behind these adjustments was the unsteadiness seen in the current market conditions.
On Saturday, Feb. 7, Calumet lowered its Group I and II postings between 20and 65 cents/gal. In the Group I category, 60 vis shed 65 cents/gal, 700 vis dropped 35 cents/gal and bright stock inched down by 20 cents/gal. Calumets Group II 70 and 100 vis neutrals lost 65 cents/gal while 150 and 325 vis prices were reduced 40 cents/gal.
Valero adjusted down its Group I and II posted prices between 20 and 65 cents/gal on Monday, Feb. 9. Solvent neutral 100 fell 65 cents/gal, SN 165 went down 40 cents/gal, 500 and 700 vis postings lost 35 cents/gal and bright stock was lowered by 20 cents/gal. The company reduced its Group II 220 neutral by 40 cents/gal.
Despite the recent initiatives by U.S. producers to push down postings, current prices remain at higher levels than those reported in April and May, 2004, when crude oil values were similar to those now being reported.
One objective player said that in the scheme of things, it is unlikely that posted prices would tumble to the 2004 levels, which were lower by 25 to 50 percent, depending on vis grade. A few other participants were not as confident. They suspect that current posted prices do have some room for further reduction, even if crude continues to hover in the $37 to $41 per barrel region.
Looking at the supply/demand situation, even though some suppliers indicated that demand has picked up, others suggested that buying interest remained thin. Consumers reported that there were no shortages of any paraffinic or naphthenic grades. Buyers from various end-use segments concurred that all requirements were being fulfilled easily, with no delayed shipments anticipated.
At the close of the Tuesday, Feb. 10, NYMEX session, front month light sweet crude futures settled at $37.55 per barrel, a loss of $3.23 from the week earlier close at $40.78/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.