Chevron initiated a slightly surprising second increase in less than a month, while SK communicated a price hike for its API Group II+/III oils, wrapping up the most recent string of hikes. Motiva started posting prices for its newly launched Group III base oils this week as well.
Chevron communicated to its customers that the company was increasing its Group II 100R and 220R base oils by 20 cents per gallon and its 600R grade by 15 cents/gal, effective Jan. 31, to reflect higher feedstock prices and current supply/demand balances.
This is the producers second increase since the beginning of the year. On Jan. 10, Chevron had moved up its Group II postings by 12 cents/gal due to strong market conditions, joining other producers who implemented similar price hikes.
This week also, SK will be lifting its YUBASE 3 (Group II+ 70) and YUBASE 4 (Group III 4cSt) base oils by 14 cents per gallon, and its YUBASE 6 and 8 (Group III) grades by 24 cents/gal as of February 1.
Paulsboros previously announced increase of 15 cents/gal for all of its Group I grades, with the exception of bright stock, will also go into effect on Feb. 1 as reflected in the Price Table below.
Additionally, Calumet will be lifting the price of its Group III 4 cSt base oil by 22 cents/gal on Feb. 1. The price of this grade is not currently posted on the Price Table.
Motiva announced last December that the company would be producing Group III base oils at its Port Arthur, Texas, plant, but the producer did not disclose details about its Group III capacity. The price of its two Group III grades (4 cSt and 6cSt) will be posted in the Price Table below, beginning with this edition of Lube Report. Sources said that Motiva had received approvals for its Group III cuts for a number of applications.
Most paraffinic and naphthenic producers have implemented price increases since the beginning of January because of the persistent gains in crude oil and feedstock values and fairly tight market conditions.
Suppliers ended 2017 with generally low inventories, and a couple of current and upcoming turnarounds may exacerbate the tightness in certain segments.
On the naphthenic side, San Joaquin Refining was expected to shut down its naphthenic base oil plant in Bakersfield, California, for maintenance at the end of January. The unit can produce 8,100 b/d of naphthenic base oils, according to LubesnGreases Guide to Global Base Oil Refining.
HollyFrontier was also preparing for a turnaround at its 9,500 barrels per day Group I plant in Tulsa, Oklahoma, scheduled for the second half of February. The producer has been building inventories to cover requirements during the shutdown.
The base oil price increases seen over the course of the month have not inhibited purchases, supplier sources said, as the mark-ups appeared to have been accepted, and requirements were registering normal levels for this time of the year.
The hikes have also resulted in higher prices for finished lubricants and other applications, with most adjustments going into effect in February.
Demand from Mexico has also been strong, especially since there continue to be issues at the local producers base oil plant. Pemex was heard to be running its 6,000 b/d Group I plant in Salamanca at very low rates, or have suspended production completely, sources said, although no confirmation could be obtained. The situation has led to additional U.S. imports of low to mid-viscosity base oils for the auto industry, according to sources.
Upstream, crude oil futures retreated on Tuesday after several sessions of gains on concerns over growing U.S. oil production. Prices had settled at their highest level since December 2014 on Friday, Jan. 26.
The International Energy Agency predicted earlier this month that U.S. production may surpass that of Saudi Arabia, rising to above 10 million barrels a day in 2018.
On Tuesday, Jan. 30, West Texas Intermediate futures closed on the CME/Nymex at $64.50 per barrel, up 3 cents per barrel from $64.47/bbl on Jan. 23.
Light Louisiana Sweet wholesale spot prices settled at $68.46 per barrel on Jan. 29, compared to $67.89 on Jan. 22, according to the U.S. Energy Information Administration.
Brent was trading at $69.02/bbl on the CME on Jan. 30, down $1.12/bbl from $70.14/bbl on Jan. 23.
Low sulfur vacuum gas oil was at March WTI plus $16.50/bbl ($82.06/bbl) and high sulfur VGO was at crude plus $14.75/bbl ($80.31/bbl) on Jan. 29. In comparison, low sulfur VGO was hovering at $79.99/bbl and high sulfur VGO at $78.24/bbl on Jan. 22, according to data published by PetroChemWire.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.