During the previous three weeks, a majority of U.S. base oil producers communicated price increases – ranging 8 cents/gal to 20 cents/gal – which were said to be driven by a tight supply and demand balance, together with steep crude oil and feedstock costs.

In the Group I category, producers implemented 15 and 20 cents/gal hikes, while the increase amounts within the Group II tier were more varied. Group II producers moved prices up by 8, 10, 11, 12, 15 and 20 cents/gal, depending on the grade and the supplier.

Group II+ producers implemented hikes of 15, 18 and 20 cents/gal, and Group III base oils edged up by 19, 20 and 21 cents/gal.

Increases were also introduced on the naphthenic side of the business, with Ergon and San Joaquin Refining (SJR) announcing 15 cents/gal mark-ups for all of their pale oils, effective April 28 and May 1, respectively.

These followed similar initiatives by Calumet and Cross Oil, who lifted prices 15 cents/gal in mid-March.

While increases sometimes inhibit the number of orders that producers receive after implementation, this time, most producers reported a steady stream of requirements.

The only deterrent to sales was the lack of availability of certain grades, sources noted. The limited supply was the result of a number of recent and ongoing plant turnarounds, coupled with healthy demand, both on the domestic and export fronts.

A maintenance shutdown was completed at Ergons Group I/II plant in Newell, West Virginia, in April.

A 52-day turnaround at the Excel Paralubes Group II unit in Westlake, Louisiana, which started in early March, was slated for completion at the end of April.

However, the unit was heard to have experienced some issues during the restart process and was not running full out, according to sources. This could not be confirmed with the plant operators directly. Production of the Excel Paralubes plant is jointly marketed by Phillips 66 and Flint Hills Resources.

There were rumblings that a second refinery had suffered a production hiccup as well, but further details were not forthcoming.

A 22-day turnaround was also expected to start at the Chevron Group II plant in Pascagoula, Mississippi, early this month. The producer did not comment on its production schedule.

Motiva was also heard to be preparing to shut down one of its Group II production trains for maintenance in June.

A U.S. Group I supplier mentioned being sold out of spot cargoes, and was therefore unable to meet requests for product from local and Mexican consumers.

Furthermore, prices in the United States are higher than in the neighboring country and as there is plenty of domestic demand, it makes more sense to place the minimal volumes that are available with local buyers, sources explained.

Given the lack of availability of Group I spot material in the U.S. Gulf, there were reports that Brazilian producer Petrobras had placed some cargoes into Mexico via a trading company.

In other market news, Calumet announced that it would start production of Group III base oils at its Shreveport, Louisiana, refinery, making it the first U.S.-based producer of virgin Group III base oil (for more details, see story in this issue of Lube Report).

Upstream, crude oil prices fell over 2 percent on Tuesday on reports of increased output in the U.S., Canada and Libya, and weaker compliance by OPEC members with the production curb agreement during the first half of the year.

West Texas Intermediate futures on the CME/Nymex settled at $47.66 per barrel on May 2, down $1.90/bbl from $49.56 per barrel on April 25.

Light Louisiana Sweet wholesale spot prices closed at $50.68 per barrel on May 1, and had settled at $50.95/bbl on April 24, according to data from the U.S. Energy Information Administration.

Brent was trading at $50.46/bbl on the CME on May 2, down $1.64/bbl from $52.10/bbl on April 25.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.