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September 9, 2015

Volume 17 Issue 52

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U.S. Base Oil Price Report

As discussions were slowly starting to surface following the Labor Day holiday, news that Motiva would be lowering the price of two of its paraffinic oils nudged market players to sit up and take notice.

According to sources, Motiva will be decreasing its STAR 4 cut (API Group II 110 vis) by 10 cents per gallon, and its STAR 6 (Group II 220 vis), by 15 cents per gallon, effective Sep. 9.

No further price revisions emerged by deadline.

The last few weeks had already ushered in a round of decreases for light- and mid-viscosity paraffinic base oil cuts, and for a majority of naphthenic oils on the back of slipping crude oil and feedstock prices.

While West Texas Intermediate (WTI) dropped to six-year lows in late August on weak economic indicators, prices surged last week, only to slip again on worse-than-anticipated trade data out of China on Tuesday.

Aside from the slowdown in the world's second largest oil consumer, concerns about global oversupply also continued to loom.

WTI closed on the CME/Nymex at $45.94 per barrel on Sep. 8, up 53 cents/bbl from its Sep. 1 settlement of $45.41.

Brent was trading around $49.52/bbl on the CME on Sep. 1, down 4 cents/bbl from $49.56/bbl a week earlier.

On Sep. 3, Calumet lowered the price of its naphthenic base oils 17 cents per gallon, only days after Ergon dropped the price of its pale oils by 10 to 17 cents per gallon, effective Aug. 27.

Other naphthenic oil price adjustments had been completed by different suppliers into a select number of accounts throughout the month of August, resulting in up to 20 cent/gal decreases.

A majority of light-to-mid-viscosity paraffinic cuts in the Group I, II and II+ categories had also seen markdowns anywhere between 10 cents/gal and 40 cents/gal in August. A few cuts in the Group II+ segment and all the Group III grades were an exception, as postings were left intact.

Sources reiterated that the lighter grades were readily available, which is one of the reasons for producers' markdowns, while the heavier cuts remain in tight supply, supporting the current pricing structure.

However, reports of price pressure coming from Europe for Group I cuts continued to circulate, and sellers expressed concern about a slowdown in demand for all grades, as this is a typical occurrence at the start of the fall season.

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