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September 11, 2019

Volume 2 Issue 37

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U.S. Base Oil Price Report

Recovery efforts in areas struck last week by Hurricane Dorian were ongoing, and while districts of the Abacos Islands and Grand Bahama have been completely devastated, areas along the United States Southeastern coast line have also suffered extensive damage, with a number of lubricant plants forced to shut down.

Coastal towns in Georgia and the Carolinas were flooded and lost power, and some lubricant blending and distributing facilities located in those areas were heard to have idled operations for a few days due to mandatory evacuations.

In Savannah, Georgia, Chemlube International‘s lubricant blending and distribution facilities were shut down for three days – two days due to the evacuations, and one to inspect the plant and restart operations, a company source explained – but no damage was reported and operations have resumed. Chemlube ships finished lubricants and base oils in bulk by truck, rail and flexitank from Savannah to customers throughout the U.S. and internationally.

Facilities of a couple of blenders and distributors in the Charleston, South Carolina, area were also heard to have been shut down during the storm, but further details were not available at press time. The hurricane also caused cancellations and delays in railway transportation and port closures.

In other production news, it was also heard that the LyondellBasell refinery in Houston, Texas, had restarted a 130,000 barrels per day crude distillation unit (CDU) on Sep. 7, following a four-day shutdown. The refinery houses a 3,600 b/d naphthenic base oil plant. The reason for the brief shutdown could not be ascertained.

Meanwhile, business was heard to be steady and “at an acceptable rate” on the paraffinic camp, as well as on the naphthenic side, although demand was less vibrant than a couple of months ago, sources admitted. This is not unusual for this time of the year as base stock and finished lubricant requirements tend to decline heading into the last quarter.

Additionally, sources commented that “refiners continue to run Permian Basin crude, which yields less base oil molecules,” helping maintain the supply/demand balance and support current pricing.

There was talk about potential opportunities to export API Group I barrels to Europe, where some production disruptions have tightened availability of Group I cuts. It was also heard that U.S. Group I shipments were due to arrive in Nigeria, while a parcel was also heard to have been concluded to Brazil.

Values were holding and no price initiatives were reported, with suppliers heard to be making efforts to maintain a constant course, despite fluctuations on the crude oil and feedstocks side.

Crude oil prices jumped on Monday, after Saudi Arabia’s new energy minister mentioned that the country remained committed to curbing production. Saudi Arabia’s King Salman on Sunday named one of his sons, Prince Abdulaziz bin Salman, as energy minister, replacing Khalid al-Falih, who had been the kingdom’s top energy representative since 2016. Prince Abdulaziz has extensive experience in the energy industry and has attended numerous OPEC meetings, experts said.

However, Prince Abdulaziz was expected to face mounting pressure from Saudi royals to boost oil prices and help reduce current budget constraints, while also lifting the value from the partial privatization of Saudi Aramco, which plans to list a percentage of Aramco this year, DailyFX.com reported.

On Tuesday, Sept. 10, West Texas Intermediate futures settled at $57.40 per barrel on the CME/Nymex and had closed at $53.94/bbl on Sep. 3.

Brent futures for October delivery settled at $62.38/bbl on the CME on Sep. 10, and had closed at $60.40/bbl on Sep. 3.

Light Louisiana Sweet crude wholesale spot prices settled at $61.13/bbl on Sep. 9, and had traded at $58.10 on Aug. 30, according to the Energy Information Administration. The markets were closed a week ago on Sep. 2 due to the Labor Day holiday.

Low sulfur and high sulfur vacuum gas oil were both at Oct WTI plus $12.75/bbl ($70.60/bbl) on Sep. 9. By comparison, low sulfur VGO was hovering at $68.19/bbl and high sulfur VGO at $68.44 /bbl on Sep. 3, according to data published by OPIS PetroChemWire. There was no trading on Sep. 2.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

Posted Paraffinic Base Oil Prices

September 11, 2019

(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

Lubes'n'Greases Publications shall not be liable for commercial decisions based on the contents of this report. 

U.S. Base Oil Price Report table

*ExxonMobil prices obtained indirectly.