Chevron told customers that effective November 5, its U.S. Gulf Coast posted pricing would decrease to reflect current market conditions. The company’s Group II 100R was lowered by 15 cents/gal, its 220R by 50 cents/gal and its 600R by 40 cents/gal.

Last week, market sources reported that ExxonMobil would lower the posted price of its Group I SN100, SN150 and SN330 grades by 15 cents/gal; Group I SN600 base stock by 20 cents/gal; and Group II+ grade (EHC 45) by 20 cents/gal as of November 1. The company’s Group I bright stock, and Group II grades (EHC 65) and EHC 120 (not included in the Price Table below) would remain unchanged.

Paulsboro will decrease its Group I SN100 and SN165 by 15 cents/gal and SN500 and SN700 by 20 cents/gal as of November 6. The company’s bright stock will not be adjusted at this time.

In late October, SK Enmove lowered all of its Group II+ and Group III base oils by 20 cents/gal, with the exception of Group III 6 cSt, which remained unchanged, effective October 21. This adjustment was thought to have been implemented to bring the company’s prices more in line with other suppliers’ postings.

The decreases partly reflected a situation that has been going on for weeks, in that suppliers have been granting many accounts temporary value allowances (TVAs) to promote orders. The TVA amounts varied, depending on the supplier and the base oil grade – the ones reported for the Group I cuts were generally lower than those for the Group II grades, with the mid- and heavy viscosity base oils in the Group II category displaying the larger discounts. Group II+ and Group III cuts saw more moderate adjustments as well.

Contrary to what had been happening over the last couple of months, Group II 100N started to lengthen, leading to downward adjustments on spot prices. There was also heightened competition from rerefined base oils, and this added to the pressure.

While U.S. spot prices for all grades was adjusted down anywhere from 2 cents/gal to 10 cents/gal from the previous week, they were still deemed high for a number of markets, with buyers in Mexico and Brazil, for instance, delaying purchases for as long as possible in hopes of achieving lower pricing. With a couple of suppliers experiencing inventory pressure, some deals were heard to have been concluded at reduced levels into Mexico. Within South America, a 4,500-metric-ton lubes cargo was discussed for shipment from La Plata, Argentina, to Rio de Janeiro, Brazil, between November 20 and December 15.

There have also been fewer shipments than anticipated to India – a country that typically receives large volumes of U.S. base oils in the fourth quarter – because the domestic market in the U.S. has not been as oversupplied as in years past and the arbitrage was still largely unworkable.

A tightening of certain Group I/Group II grades was partly attributed to a producer having suffered an unexpected production issue which resulted in one to two weeks’ maintenance in October. The producer was understood to have restarted its base oils unit and increased production rates, allowing it to meet contractual obligations. Spot offers had been largely suspended until it was able to rebuild inventories, according to sources.

A turnaround at Chevron’s Group II/Group III plant in Richmond, California, was expected to be have been completed at the end of October, but had not been anticipated to impact base oil availability significantly as the producer had built inventories ahead of the shutdown, although sources said they had observed some market tightening of the 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.

Within the Group III segment, downward pressure on 4 cSt has led to more significant adjustments than for 6 cSt and 8 cSt grades. A domestic producer’s cutting back its Group III 4 cSt output to boost its Group II production might tighten that segment slightly. Nevertheless, all of the Group III cuts were deemed plentiful as domestic production had increased in the previous months and fresh cargoes from the Middle East and Asia were anticipated to reach U.S. shores over the next few weeks. 

Naphthenics

On the naphthenic base oils front, prices were reported as steady, although there has also been talk about some TVAs and discounts being granted given lower crude oil and diesel prices, without any formal announcements of price revisions emerging following a widespread 20-cents/gal decrease in mid-September. 

Some discounts come on the back of efforts by producers to attain more balanced inventories of the heavy grades ahead of year-end. Demand for the lighter grades has been healthy and supply was deemed balanced-to-tight against requirements. The heavier grades experienced more subdued consumption as these cuts serve segments such as the tire and rubber industries and other automotive applications, which have seen a slowdown after the end of the summer driving season. However, keen demand from export markets in Latin America were helping keep inventories in check.

Lubricant and finished products prices have also been exposed to downward pressure as manufacturers try to maintain or gain market share. Some finished products manufacturers have managed to secure discounts for additives, but the decreases have not been granted by all suppliers and not every blender had seen discounts, sources said.

Crude

Market participants were also monitoring crude oil and feedstock values as they have fluctuated significantly in recent weeks, reacting to news emerging from the Middle East in regard to the Israel-Hamas war, and from China as oil demand was expected to be disappointing from the world’s top importer given current economic conditions in that country. The decision by OPEC+ to delay implementation of a proposed production hike by a month from December provided some price support.

On Tuesday, crude oil futures inched up by about 1% as Tropical Storm Rafael, which was forming in the Gulf of Mexico and was forecast to hit U.S. territory over the weekend, was expected to impact U.S. oil output. The dollar also weakened on election day, with polls showing America’s presidential election remarkably close, although the final result may not be available for several days. Many nations were watching the incredibly tight race that could change geopolitical alliances, upend international trade, and define the future of the world’s largest economy.

On November 5, WTI December 2024 futures settled on the Nymex at $71.99/bbll, compared to $67.21/bbl on October 29.

Brent futures for January 2025 delivery were trading on the ICE at $75.53/bbl on November 5, from $71.50/bbl for December futures on October 29.

Louisiana Light Sweet crude wholesale spot prices were hovering at $73.63/bbl on November 4, from $69.15 on October 28, according to the Energy Information Administration.

Low-sulfur diesel was at $2.29/gal at New York Harbor and at $2.22/gal on the Gulf Coast on November 4, compared to $2.14 and $2.06/gal on October 28, respectively, according to the EIA.

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

Posted Paraffinic Base Oil Prices November 6, 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: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/ Historic and current base oil pricing data are available for purchase in Excel format.

*ExxonMobil prices obtained indirectly.
**Rerefiner