Calumet announced a paraffinic price decrease of 15 cents/gal on its Group II 75/80N, 100N, and 150N grades and of 40 cents/gal on its Group II 325N grade, effective November 15. The producer will not be revising its Group I prices at this time.

These adjustments follow those of several other suppliers, including ExxonMobil, Paulsboro, SK Enmove, Motiva and Chevron, who have also lowered posted prices by 15-50 cents/gal, depending on the grade, between October 21 and November 5.

Market participants noted that the decreases did not come as a surprise as they mirrored competitive actions by suppliers who were hoping to capture additional orders, expand 2025 contract commitments and attain more balanced inventories to avoid tax repercussions at the end of the year. Some producers had already granted temporary value allowances and the posted price decreases appeared to be a more official communication about the adjustments, sources commented.

There had been slightly less pressure on Group I producers because that segment has generally been tight, although at least one supplier has been eager to increase its sales and has also offered competitive pricing into Mexico, according to sources. Bright stock was perhaps the exception in that prices held mostly steady given more limited availability and healthy demand.

Supply of the mid- and heavy-viscosity base oils in the Group II category lengthened and producers were therefore eager to find a home for their products. The Group II 100N cut was fairly tight until two weeks ago, when it was heard to have become more plentiful and was now deemed balanced against demand. There was also competition from rerefined base oils, but no official posted price decreases have been announced by rerefiners so far.

Group I/Group II grades had been tighter because a producer had shut down a production unit for one to two weeks’ unplanned maintenance in October. The producer was understood to have restarted production and increased production rates, allowing it to meet contractual obligations. Spot offers were largely suspended until it was able to rebuild inventories, sources said.

A turnaround at Chevron’s Group II/III plant in Richmond, California, was expected to have been completed by the end of October. The producer was heard to have built inventories ahead of the shutdown to fulfill requirements, although sources said they had observed some market tightening of Group III grades produced at that plant. Chevron was also understood to be planning to take its Pascagoula, Mississippi, plant off-line for three weeks in the first quarter of 2025. There was no confirmation about the turnaround schedule as the producer does not comment on the status of its base oil operations.

A lengthening of supplies in the domestic market exerted pressure on spot indications, with most grades experiencing 5-10 cents/gal downward adjustments from the previous week. Export prices slipped by similar amounts as suppliers hoped to place volumes into various destinations in Latin America, the Middle East and Africa.

While export shipments to India were thin, it was heard that there have been discussions to move U.S. barrels in December. Movements of products to India have been fewer than anticipated at this time of the year due to uncertainties in the Indian lubricants segment, a snug supply situation in the domestic U.S. market and steep prices that have hampered arbitrage business.

Within the Group III segment, 4 cSt was still under more downward pressure than the 6 cSt and 8 cSt cuts because of more abundant availability, but a U.S. producer was understood to have trimmed its production of 4 cSt to favor Group II output. Even so, the Group III segments were expected to be well-supplied, as shipments from Asia and the Middle East were scheduled to arrive over the next few weeks.

Naphthenic

In the naphthenic camp, prices were steady, although some temporary value allowances and discounts were reported as a result of the lower crude oil and diesel prices, but there have been no formal announcements of price adjustments. The last announced decrease of 20 cents/gal for all pale oils was mid September.

Activity in the lighter grades segment has been more brisk than on the heavy-grade side because of seasonal patterns and steady demand from the transformer oil segment. There has also been buying interest for most grades from Latin America and suppliers were heard to be considering opportunities in those markets.

Competitive action was also reported downstream within the various lubricant and finished products segments as manufacturers strove to protect or gain market share. Some finished products manufacturers managed to secure discounts for additives, but the decreases have not been granted across the board and not every blender benefitted from discounts, according to sources.

Crude

Crude oil markets continued to be dominated by supply concerns, particularly in China, the world’s top oil importer. Saudi Arabia’s crude oil deliveries to China were expected to fall to 36.5 million barrels in December – the second straight month-on-month decline after registering 37.5 million barrels in November and 46 million barrels in October – reflecting weak demand.  

On Tuesday, crude oil futures hovered near two-week lows on news that OPEC+ cut its oil demand growth forecast, a stronger dollar and misgivings about China’s latest stimulus plan. International policymakers also expressed concerns about the protectionist policies from the incoming U.S. administration that might hamper global growth, Reuters reported.

On November 12, WTI December 2024 futures settled on the Nymex at $68.12 per barrel, compared to $71.99/bbl on November 5.

Brent futures for January 2025 delivery were trading on the ICE at $72.03/bbl on November 12, from $75.53/bbl on November 5.

Louisiana Light Sweet crude and low sulfur diesel settlements were not available on November 11 due to Veteran’s Day in the U.S.

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

Posted Paraffinic Base Oil Prices: November 13, 2024 (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. Archived base oil price reports can be found through this link: 
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*ExxonMobil prices obtained indirectly.
**Rerefiner