Also on September 1, Excel Paralubes lowered its Group II 70N by 30 cents/gal, its 110N by 20 cents/gal, and its 220N and 600N by 40 cents/gal.

SK Enmove informed customers that the company would be reducing the posted price of its Group III 4 cSt grade by 10 cents/gal and its Group III 8 cSt grade by 18 cents/gal as of Sep. 1. The company’s Group II+ base oils and Group III 6 cSt remained unchanged.

Effective September 3, Chevron’s U.S. Gulf Coast posted pricing decreased to reflect current market conditions as well. The company’s Group II 100R was adjusted down by 20 cents/gal, and its 220R and 600R cuts fell by 50 cents/gal.

Calumet also announced a paraffinic price decrease, which will go into effect on September 6. The producer will be decreasing its Group II 75/80N, 100N and 150N grades by 18 cents/gal and its 325N grade by 40 cents/gal.

The posted price decreases did not come as a complete surprise, as suppliers typically start to clear inventories following the most active period of the hurricane season between August and September, and an increase in availability places pressure on pricing. Feedstock prices have also declined, with vacuum gas oil values showing significant losses since the last posted price increases back in April.

The decreases came on the back of slowing demand, healthy inventories, falling crude oil prices and a series of temporary value allowances or adjustments (TVAs), which were said to have been triggered during contract negotiations by producers’ need to maintain market share and place specific volumes. However, not all accounts had been granted TVAs.

“I have heard some customers have received TVAs or discount offers while others have not,” a source confirmed, with participants indicating that TVAs of between 10 cents/gal and 20 cents/gal for Group II base oils were fairly prevalent, and were higher for Group III grades at 20 cents/gal to 40 cents/gal.

A major Group I and Group II/Group II+ producer was heard to have granted hefty TVAs for contract business in recent weeks and it was not clear whether the supplier would be adjusting its posted prices and withdrawing the TVAs.

While some base stock grades, such as the Group I cuts and Group II 100N remained tight, other Group II base oils were showing some length as reflected in the posted price decrease amounts for these grades, which were more significant. Group I suppliers have so far not announced any posting adjustments.

There was a temporary tightening of Group II and Group III domestic supplies as a refiner suffered a brief unplanned outage in late August, but the unit has been restarted. A rerefiner was also heard to have resumed output, following a short shutdown, and was expected to have limited extra availability of base oils during the next couple of months.

Group II prices had also been exposed to downward pressure because of a narrowing spread with Group III grades, and this had prompted some blenders to use more Group III grades whenever applications allowed substitution. Within the Group III segment, the 6 cSt and 8 cSt grades have been less readily available than the 4 cSt cut, but Group III supplies in general have become more plentiful given regular shipments from Asia and the Middle East. Domestic production of Group III base oils has also increased in recent months, and while most of the production is used captively by the refiners, it has resulted in additional supplies becoming available for spot business.

Meanwhile, steady buying interest from Europe, Africa and Latin America have supported Group I and Group II export prices, with few changes reported over the last couple of weeks. There continued to be inquiries from Mexico, and lower posted prices in the U.S. domestic market seemed to be encouraging Mexican buyers to seek lower import values. While there continued to be buying appetite from a couple of countries on the West Coast of South America, U.S. cargoes were facing competition from attractively-priced Asian exports, as supplies in that region were outpacing demand.

Brazilian buyers have also expressed interest in U.S. cargoes as local supplies were not expected to be sufficient to cover revived demand. A 5,000-metric-ton base oils parcel was heard to have been lifted in the U.S. Gulf to Brazil on the Magenta Ray in early August, and other shipments were being considered.

Naphthenics

On the naphthenic base oils front, supply and demand were described as largely balanced, offering stronger support to prices than on the paraffinic side, according to sources. Naphthenic base oil suppliers were monitoring developments on the paraffinic side and explained that pale oil values were less likely to be revised as prices have been comparatively lower than paraffinic values and demand has held up better as well, despite the end of the summer driving season. Some naphthenic base oil contracts which are tied to a diesel index may have received downward adjustments, but prices for other accounts were steady.

Exports of U.S. naphthenic oils to Europe and Latin America were also helping keep inventories in check, sources said.

Upstream, crude oil futures extended their volatile tendencies into September, with West Texas Intermediate (WTI) futures plunging by more than 4% on Tuesday and settling at their lowest level since December. Reports that Libya could resolve a dispute that led to supply disruptions, and that OPEC+ could potentially increase output in October weighed on prices, CNBC.com reported. Data showing a manufacturing slowdown in China and the U.S. also fanned oil demand concerns.

On September 3, WTI October 2024 futures settled on the Nymex at $70.34 per barrel, compared to $75.53/bbl on August 27.

Brent futures for November 2024 delivery were trading on the ICE at $73.75/bbl on September 3, compared to $78.85/bbl for October futures on August 27.

Louisiana Light Sweet crude wholesale spot prices were hovering at $76.42/bbl barrel on August 30, from $80.15/bbl on Aug. 26, according to the U.S. Energy Information Administration.

(There was no trading on September 2 due to the U.S. Labor Day holiday).

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

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.