U.S. Base Oil Price Report

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More paraffinic and naphthenic base oil suppliers issued price hike notices to their customers this week. ExxonMobil is raising prices 30 to 35 cents per gallon effective tomorrow, June 12, sources said, while several API Group II and III producers rounded out the price initiative that began the first week of June.

Flint Hills Resources said it raised its Group II 100HC neutral 20 cents per gallon on Friday, June 6. The company, which last raised prices May 23, did not adjust any other grade this week.

ConocoPhillips pushed up its PurePerfomance Group II grades by 25 to 30 cents/gal Monday, June 9. The light vis 70N went up 28 cents/gal, 80N went up 30 cents/gal, and 110N, 225N and 600N climbed 25 cents/gal. The company also confirmed that Group III Ultra-S oils moved up 25 cents/gal for all grades. ConocoPhillips markets S-Oils Group III oils in North America.

SK also bolstered its line-up of Group III Yubase oils by 25 cents/gal on June 9.

Motiva laid out plans to push up all Group II and II+ base stock prices by 30 to 40 cents/gal tomorrow, June 12. Star 3, 6 and 12 oils will go up 35 cents/gal, Star 4 will bounce 40 cents/gal higher, and Star 5+ will add 30 cents/gal.

ExxonMobil, which last raised prices on June 2, told customers yesterday that it is increasing prices 35 cents per gallon on all products except 600 neutral, which goes up 30 cents/gal, effective tomorrow, June 12, sources said.

In the naphthenic sector, Ergon, Cross Oil and Calumet said they would hike all grades a minimum of 25 cents/gal. In some cases, increases will tally more than 30 cents/gal. Ergon will implement its adjustments on June 13, Crosss initiatives are effective June 14, while Calumet will push up prices on June 19. Rising transportation and fuel surcharges were instrumental factors leading suppliers to hike prices.

Nynas and San Joaquin Refining have opted to take a watch-and-see position for the immediate future, while keeping a close eye on the trend of crude oil prices this week. Both companies indicated that hikes were likely unless oil values take a significant downturn. It was also pointed out that Nynas increased naphthenic oils by 40 to 60 cents/gal on June 1, considerably more than other pale oil producers during the previous round of hikes, when most sellers went up 25 cents/gal.

Sources reiterated that overall demand remains healthy while virtually all paraffinic and naphthenic grades remain tight in availability. It was understood that a number of large consumers are seeking alternate supply sources, but are finding it difficult to obtain fresh quantities.

As a point of interest, rounds of price hikes for paraffinic and/or naphthenic grades have swept through the U.S. base oil market every week since Feb. 18.

Sources confirmed that discounts to posted prices have narrowed to around 10 percent or less in recent months due to increased demand and scant supply. In some situations, contract customers are realizing volume discounts of only 3 to 6 percent off the posted price. The lesser discount is largely representative of higher quality oils such as Group II+ and III. However, even for Group I and some Group II grades, volume discounts, which used to be as much as 20 percent last year, have shrunk back to around 7 to 10 percent, sellers and buyers confirmed.

Given the overall tight supply position, spot activity has been reduced to be almost nonexistent. There are some shipments heading offshore, but most of these deals or trades are deemed regular business although they may not be titled as contract. In one interesting case, a Northeast producer issued a sale tender offering 6,000 metric tons of SN 150 for a shipment window between late June and early July. There is a confirmed buyer, and the price has been established in excess of $4.10/gal FOB. There is another price stipulation which is indexed to feedstock vacuum gas oil.

The latest price indications for VGO are pegged at $3.45 to $3.46/gal for low sulfur while high sulfur is closer to $3.37 to $3.39/gal for barge lots. Cargo VGO parcels are weighing in at about 1.5 cents/gal below prices for barge movements.

At the close of the Tuesday, June 10, NYMEX session, light sweet crude futures settled at $131.31 per barrel, up $7/bbl from the week earlier settlement at $124.31. Crude oil prices screamed up to a new record, just over the $139/bbl mark, on Friday, but values retreated this week.

Carolyn L. Green, based in Houston, can be reached directly at carolynlgreen@gmail.com.

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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