Five Seconds of Summer
The base oils market appeared somewhat baffling as it entered the summer driving season. Some suppliers observed a comfortable stream of orders, while others started to see signs of cooling consumption levels.
The slowdown was not completely surprising as demand typically starts to soften once the driving season gets underway. The Memorial Day weekend in late May – the unofficial start of the summer driving season – had already shown heated driving activity. Blenders traditionally build base oil inventories to manufacture lubricants and other finished products to meet stronger demand as drivers ready their vehicles for summer travel, which often includes oil changes.
Additionally, producers and consumers also start to stockpile base oils in preparation for the hurricane season, which runs from June 1 until Nov. 30 in the Atlantic Basin and was forecast to be a very active one this year.
Economic and trade uncertainties brought on by the changing tariff agenda of United States President Donald Trump continued to affect activity and clouded demand projections in the short and long term. Many economic segments were directly affected by the tariffs as manufacturers and retailers import products, raw materials and components from different origins around the world.
Despite the ongoing tariff upheaval, base oil prices were generally stable, supported by fairly balanced supply and demand fundamentals, although the heavy-viscosity grades had started to lengthen by early June.
Participants were also keeping a close eye on crude oil futures because they remained volatile, having lost considerable territory since early April. This exerted downward pressure on base oils and prompted one paraffinic supplier and most naphthenic producers to announce price decreases in May. In early June, crude futures surprisingly reversed course and traded at three-week highs on ongoing geopolitical tensions between Russia and Ukraine, and between the U.S. and Iran. Trade discussions between President Trump and Chinese President Xi Jinping mustered optimism and lifted oil prices too.
Downstream, lubricant manufacturers were facing customer pressure to reduce pricing, but production costs had increased, particularly for those blenders who import additives and components, although additive increases announced in May appeared to have been postponed or rescinded. Most base oil prices remained on firm ground, however, granting little relief.
The API Group I grades were on the tight side, not only in North America, but in other regions as well on the back of permanent plant closures in recent years and temporary shutdowns for maintenance. The star of the show continued to be bright stock, with demand described as robust and prices remaining on firm ground. Suppliers had limited surplus volumes available, with small spot cargoes moving to Europe, Africa and Latin America.
A number of turnarounds – including those of Calumet, American Refining Group and Ergon – exacerbated the snug conditions affecting the heavy-viscosity Group I grades. Buying interest from Mexico for U.S. base oils was also steady, but prices inched up as availability in the U.S. had been more limited than expected.

There had been expectations that downward pressure would be building on Group II grades as Chevron’s turnaround in Pascagoula, Mississippi, was completed in late May and additional product was anticipated to become available. Chevron announced a 35-cent-per-gallon posted price decrease on its Group II base oils in mid-May, but other paraffinic prices remained largely unchanged.
At the same time, there were other Group II maintenance programs being completed – including one at Motiva’s unit in Texas – and the Excel Paralubes plant in Louisiana was heard to be running at reduced rates, curbing spot supplies. These production issues were not expected to be resolved until the plant’s scheduled turnaround in October. Ergon Refining Inc. completed maintenance and implemented several reliability improvements at its Group I/Group II unit in West Virginia in the second half of May, and most rerefining units were also running well, adding to the oversupply concerns.
A global tightening of Group III base oils supported generally firm prices on the back of plant turnarounds in North America, Asia and the Middle East. In the U.S., domestic Group III production had been trimmed in favor of Group II output and import volumes had been either reduced or delayed.
The restart of production at Petro-Canada’s Group III plant in Mississauga, Canada, in early May following a turnaround was expected to allow for additional product to enter the supply system. Other turnarounds included those of SK Enmove in South Korea, Adnoc in the United Arab Emirates and Bapco in Bahrain.
On the naphthenic base oils side, prices were mostly steady, following 20-cent-per-gallon price decreases implemented on a majority of grades in mid-May. The adjustments were said to have been driven by falling crude oil and feedstock prices and growing supplies of the heavier grades. The light cuts remained fairly tight given robust demand from the transformer oil and process oils segments, with at least one supplier not adjusting pricing for these grades. Further tightening of spot supplies was anticipated in the second half of the year as Ergon will be embarking on a turnaround in September.
As with any weather forecast, conditions in the base oils market remained difficult to predict, but participants hoped to enjoy a few weeks of stability without unsettling events to disrupt the summer quiet.
Gabriela Wheeler is base oil editor for Lubes’n’Greases. Contact her at Gabriela@LubesnGreases.com