ExxonMobil increased posted base oil prices Monday by 2 to 7 cents per gallon on its Group I stocks, and 5 cents per gallon on Group II-Plus, the first increase in its U.S. posted prices since Feb. 25. All the principal U.S. paraffinic refiners promptly followed suit, with price increases going into effect this week and early next week.
ExxonMobil reportedly informed customers that the price move is the result of supply-and-demand factors. Group I has snugged up, and ExxonMobil is looking globally, one observer commented. Europe is tight, and so is much of Asia. Plus the inventory at Shell is only now being depleted, so ExxonMobil is probably getting a lot of inquiries, perhaps more than they can handle.
In late February crude was over $36 a barrel on the New York Mercantile Exchange;yesterdaycrude closed just over $32 per barrel. Several observers noted that the price move probably isnt crude-related. I am surprised, one marketer said. I had assumed that the strong price of crude was the only thing keeping [base oil] prices from falling and that [base oil] wouldnt be pushed any higher.
I dont think [the U.S. price increase] will draw base oil from Europe, another observer noted. Europe is having supply problems because of the heat wave.
The real problem is how to pass these price increases along to customers, said another marketer. Blenders are between a rock and a hard place. Finished oil prices should be going up, but blenders cant raise prices. Itll be tough …
In the wake of the price rise, industry speculation picked up about possible ExxonMobil actions, including U.S. introduction of a Group I-Plus base stock, and about increased pressure on smaller, older Group I refineries. ExxonMobil has something else to tell us, but well have to wait til theyre ready, said one observer.
ExxonMobil raised prices 7 cents per gallon on its light neutrals, 6 cents on medium, 5 cents on its 600 neutral Group I and on its Group II-Plus, and 2 cents on bright stock. Valero, Calumet, Sunoco and Citgo announced similar increases, as did ConocoPhillips, except that its 110 neutral increased by 5 cents. Motiva increased prices 5 cents across the board. ChevronTexaco increased light stocks 5 cents, medium 7 cents, and 600 5 cents. Lithcon reports no change for now in its posted prices.
All of the reported price increases are included in the chart below. ChevronTexacos and Citgos take effect today; Sunocos are effective Thursday; Calumets are effective Friday; and Valeros are effective Monday, Aug. 18.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.