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January 15, 2020

Volume 3 Issue 8

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U.S. Base Oil Price Report

After almost eight months of unchanged postings, Motiva stepped out with an increase for its API Group II and III posted prices this week, followed closely by Chevron, Excel Paralubes and Calumet.

Motiva communicated that it was increasing the price of its base oils by 30 cents per gallon across the board, effective Jan. 13. Although the company did not elaborate on what had triggered the markups, sources speculated that they were linked to steeper crude oil and feedstock values over the last several weeks, together with a sudden tightening of several grades.

Chevron also announced that it was raising the price of its Group II base oils "to reflect current market conditions," a company source said. Chevron's Group II 100R grade went up by 30 cents/gal, its 220R increased by 27 cents/gal and its 600R climbed by 25 cents/gal, with an effective date of Jan. 14.

Excel Paralubes will be lifting the price of its Group II base oils on Jan. 16. The producer's Pure Performance 70N, 80N and 110N will be marked up by 30 cents/gal, its Pure Performance 225N will be raised 29 cents/gal and its Pure Performance 600N will increase 25 cents/gal.

Calumet will also be increasing the price of its Group I and II base oils, with the exception of bright stock. The company's Calpar 60/80/100/150 grades will be increasing by 30 cents/gal and its Calpar 325/600 grades will be moving up by 25 cents/gal as of Jan. 21. The price of Calumet's bright stock 150 (Calpar 2500) will not be revised at this time.

Whether the balance of the suppliers would be adjusting prices was not clear, although a couple of them suggested that they were mulling different options.

From the base oil supply standpoint, participants noted that a number of base oil grades had become less readily available due to recent and ongoing turnarounds, coupled with increased output of fuel and heating oil during the winter months, which leads to less base oil being produced. The vacuum gas oil/distillate is typically moved over to the fuel stream without processing into a base stock when better margins can be obtained, a source confirmed.

With the increase in demand for low-sulfur marine fuel oil, following the implementation of the IMO 2020 rules on Jan. 1, more of this type of fuel might be produced by those refineries that have the ability to switch, other sources observed. A few base oil plants have also been running at reduced rates over the last few months to avoid a build-up of inventories.

It was heard that Excel Paralubes had embarked on a catalyst change at its 22,200 barrels-per-day Group II base oil plant in Westlake, Louisiana, with the hydrocracker anticipated to be down for 25 days. The company expected to fulfill contract commitments as it has built stocks ahead of the maintenance program.

Blenders said that the announced base oil increases would be difficult to transfer down the supply chain, particularly as some of the large accounts have 90-day price terms. Some revisions on downstream products such as lubricants, additives and greases were starting to emerge for February implementation on the back of the higher cost of raw materials, packaging and transportation, but further details could not be confirmed by press time. 

Upstream, crude oil futures moved up slightly on Tuesday, ending four straight days of declines on easing Middle East tensions and preparations for the signing of a preliminary trade deal between the United States and China – the world's top energy consumers – potentially ending a dispute that has cut global growth and reduced demand for oil, Yahoo.com reported.

U.S. and China trade representatives were expected to sign a "phase one" deal on Wednesday that would end almost two years of disputes, promising billions of dollars’ worth of agricultural purchases and the beginning of reforms to China’s longstanding practice of forced technology transfer. The deal would include a “dramatic expansion of U.S. food, agriculture and seafood product exports” and an agreement by China to end its practice of forcing or pressuring foreign companies to transfer their technologies to Chinese companies, according to a U.S. Trade Representative statement.

On Tuesday, Jan. 14, West Texas Intermediate futures settled at $58.23 per barrel on the CME/Nymex, and had closed at $62.70/bbl on Jan. 7.

Brent futures for March delivery were reported at $64.49/bbl on the CME on Jan. 14, from $68.27/bbl on Jan. 7.

Light Louisiana Sweet crude wholesale spot prices settled at $61.92/bbl on Jan. 13 and had closed at $67.02 on Jan. 6, according to the Energy Information Administration.

 

Historic and current base oil pricing data are available for purchase in Excel format.