A wave of price hike announcements issued by ConocoPhillips, Sunoco and Valero rolled through the U.S. base oil market during the past week, outlining increases in the range of 30 to 40 cents per gallon for products meeting API Groups I, II, and III.
On Monday, June 23, ConocoPhillips moved up all its Group II neutrals by 35 cents/gal., with the exception of 110 vis, which climbed 40 cents/gal. The company also said that all Ultra-S base oils, which ConocoPhillips markets for S-Oil in North America, rose 35 cents/gal.
On Tuesday, June 17, Sunoco announced that it had raised all Group I solvent neutrals by 35 cents/gal.
Valero also adjusted its base stocks on June 17. The company bolstered most all its Group I and II grades by 35 cents/gal, the exception being 500 vis and 700 vis, which moved by 30 cents.
Meanwhile, market activity appeared less hectic than over the past few months, despite the rash of price hikes. It was unclear whether customers had opted for the sidelines in hopes that the tight supply situation would improve soon.
For now, however, producers say that overall base oil availability remains tight at least for the near term, possibly through the end of summer. It has been well documented that demand has been healthy. Suppliers have been filling customer orders as quickly as possible, although there are some delayed shipments due to low stocks or insufficient transportation options. Customers are eager to keep their own inventories at sufficient levels, but this has been challenging given the shortness of ready supply during the second quarter.
Of related interest, some market onlookers had expected crude values would have retreated from high levels following last weeks news that Saudi Arabia would bump up oil production by 200,000 barrels per day commencing with July.
Indeed, prices did recoil, shedding several dollars in the middle of last week and easing down to around $130 to $131 per barrel. But they headed back up earlier this week on militant actions in Nigeria and a weaker U.S. dollar, according to sources.
The crisis in Nigeria, however, appears to have cooled somewhat. Royal Dutch Shell Plc said on June 24 that it had resumed production at its Bonga field in Nigeria. The restart came after the area had been attacked by militants a week earlier.
At the close of trading on the New York Mercantile Exchange Tuesday, June 24, the futures contract for August, now the front-month, settled at $137 per barrel, up $2.99 from the week-earlier close at $134.01. NYMEX settlement prices for crude are up approximately $13/bbl since the beginning of the month.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.