Base Oil Pricing Report

Base Oil Report

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The long-awaited spring fling and its accompanying increase in base oil demand and market activity arrived slightly later than usual this year, possibly as a result of prolonged winter weather conditions in many parts of the United States together with flooding and other logistical issues that affected cargo movements on the Gulf Coast.

An upswing in order levels finally made its entrance in late March, alongside a steep increase in crude oil and feedstock prices, which prompted not only one, but two rounds of base oil price increases between March 14 and May 9.

The second wave was initiated by Motiva on April 9, when the producer implemented increases of 25 to 30 cents per gallon for its API Group II and Group III base oils.

In the span of a month, the balance of suppliers joined in and communicated price hikes for their Group I, II, II+ and III base stocks, ranging 15 to 35 cents per gallon, with implementation dates peppered between April 9 and May 9.

On the naphthenic base oil front, Cross Oil lifted its pale oils by 12 and 15 cents/gal, depending on viscosity, on April 22. Ergon, Calumet and San Joaquin Refining notified customers of 20-cent increases between May 3 and May 9.

Finished lubricants, greases and additives also underwent upward price adjustments in the realm of 5 to 8 percent, effective early May. Suppliers noted that the initiatives had spurred an uptick in orders in late April from buyers who preferred to beat the increases, although spring requirements were not as strong as in years past.

While a majority of paraffinic and naphthenic producers had been watching crude oil prices with an anxious eye as numbers climbed steadily in March and April-substantially squeezing margins-an easing of crude oil and feedstock values in early May provided some relief, as some of the pressure seemed to have abated and a more stable price scenario was introduced. Base oils and finished lubricants suppliers hoped that this stability would support steady growth in demand ahead of the summer driving season.

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