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U.S. Base Oil Price Report

January 8, 2014

The U.S. base oil market will take a few days to regain its rhythm after waltzing through the year-end holidays, but participants said that the first signs of a pickup in demand have started to emerge.

A majority of producers had been worried about finishing the year with hefty inventories amid dwindling requirements, but most were able to reduce stocks in the last quarter, ending December in better shape than originally expected.

Lower spot prices and temporary voluntary allowances (TVAs) had been granted as a means to promote sales, but these have been largely removed and no further price reductions have been reported for the time being.

Attractive prices also led to large quantities of U.S. product being exported to India and Mexico in the last quarter of the year. Demand from Mexico is expected to remain strong as the inventories of local producer Petroleos Mexicanos (Pemex) are very low, sources explained.

U.S. market participants believed that base oil prices would remain fairly stable, despite squeezed margins and continued pressure from volatile crude oil and feedstock vacuum gas oil prices.

However, sources also pointed out that West Texas Intermediate (WTI) values slipped from highs around $110 per barrel in mid-2013, and that January was not the best time to introduce price changes, as requirements are still fairly slow. 

Market conditions were expected to show more strength in late February, but the introduction of added capacity into the U.S. supply network will weigh heavily on suppliers’ minds at that juncture.

Understandably, a lot of attention will focus on the impending start-up of the new Chevron base oil plant in Pascagoula. The 25,000 barrels per day API Group II unit was scheduled to achieve mechanical completion by the end of 2013, and commercial product was expected to be available in late Q1 2014. Despite recent reports that the start-up had been delayed, market sources familiar with Chevron’s operations said that the process to bring the plant on line was on schedule.

In other production news, it was heard that one of Motiva’s base oil units is currently undergoing a turnaround. The turnaround at the smallest of the three units at Port Arthur, Texas, will only affect production of light viscosity grades and will be completed in less than twenty days, according to industry sources. The shutdown is not expected to have a significant impact on availability as the producer has built inventories to cover for the shortfall. Motiva has postponed a turnaround scheduled at a larger unit from the first quarter to the third quarter of 2014. Motiva has a total base oil capacity of 40,300 b/d at the Port Arthur refinery.

Upstream, WTI crude futures rebounded after a five-day downward trek during which prices dropped by almost $7 per barrel. The rise came on the back of forecasts that U.S. stockpiles had dipped ahead of a weekly report from the Energy Information Administration (EIA).

WTI settled on the CME/Nymex at $93.67 per barrel on Tuesday, Jan. 7, down $5.62 from a settlement at $99.29/bbl on Dec. 30.

Brent crude was trading around $107.35 per barrel on the CME, down $3.86 from $111.21/bbl a week ago.

LLS (Light Louisiana Sweet) was trading at a premium to WTI of around $6/bbl on Jan. 4, compared with $4.50/bbl on Dec. 28.

 U.S. posted paraffinic base oil prices, as reported each week in Lube Report from Jan. 2004 to the present, are now available in Excel format. See www.BaseOilPrices.com.

Posted Paraffinic Base Oil Prices

 

 

       
January 8, 2014
(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton.)  
         

 

 

       
Group I      

 

 

       
Viscosity

ExxonMobil*

Paulsboro

HollyFrontier

Calumet

   

Gulf Coast

East Coast

Midwest

Gulf Coast

   

$/gal

$/mt

$/gal

$/mt

$/gal

$/mt

$/gal

$/mt

   
70

 

 

 

 

3.61

1,123

 

 

   
100

3.67

1,125

3.92

1,203

3.61

1,105

 

 

   
148-165

3.71

1,128

3.86

1,166

3.79

1,164

 

 

   
250

 

 

 

 

3.93

1,195

 

 

   
300-350

3.86

1,161

 

 

 

 

 

 

   
500-525

 

 

4.37

1,307

4.41

1,332

 

 

   
600-700

4.23

1,266

4.40

1,302

 

 

5.05

1,505

   
Bright

4.56

1,338

4.71

1,377

4.75

1,411

4.77

1,416

   
stock 150    
 

 

 

 

 

 

 

 

 

 

 

Group II

 

 

 

 

 

 

 

 

 

Viscosity

Motiva

Phillips 66

Chevron

Calumet

Flint Hills

Gulf Coast

Gulf Coast

West Coast

Gulf Coast

Gulf Coast

$/gal

$/mt

$/gal

$/mt

$/gal

$/mt

$/gal

$/mt

$/gal

$/mt

70

 

 

3.73

1,153

 

 

 

 

3.63

1,124

75-80

 

 

3.73

1,145

 

 

3.59

1,108

3.63

1,114

100-110

3.62

1,125

3.65

1,132

4.07

1,262

3.56

1,094

3.63

1,120

145-150

 

 

 

 

 

 

3.99

1,222

 

 

200-230

4.00

1,220

4.00

1,216

4.37

1,337

 

 

3.95

1,208

325

 

 

 

 

 

 

4.65

1,417

 

 

600

4.55

1,379

4.60

1,389

5.20

1,581

 

 

4.52

1,366

         

 

 

       
Group II+      

 

 

       
Viscosity

ExxonMobil*

SK

Phillips 66

 

 

   

Gulf Coast

Gulf Coast

Gulf Coast

 

 

   

$/gal

$/mt

$/gal

$/mt

$/gal

$/mt

 

 

   
50-60

 

 

 

 

4.55

1,470

 

 

   
70-80

 

 

5.16

1,646

4.65

1,488

 

 

   
110-130

3.87

1,210

       

 

 

   
190

3.82

1,180

       

 

 

   
         

 

 

       
Group III      

 

 

       
Viscosity

SK

Phillips 66

 

 

       

Gulf Coast

Gulf Coast

 

 

       

$/gal

$/mt

$/gal

$/mt

 

 

       
4 cSt

5.46

1,736

4.93

1,563

 

 

       
6 cSt

5.46

1,714

 

 

 

 

       
8 cSt

5.44

1,693

5.03

1,579

 

 

       
         

 

 

       
* ExxonMobil prices obtained indirectly.

 

 

       
         

 

 

       

Courtesy of Gabriela Wheeler, Lubes ‘N’ Greases

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