US base oil prices rise, breaking nine-week lull

27 May 2009 16:34  [Source: ICIS news]

HOUSTON (ICIS news)--A few US base oil suppliers announced hikes for June, breaking a nine-week silence in the lubes sector, buyers said on Wednesday.

Chevron announced a 20-cent/gal hike for all grades of Group II base oils, effective on 1 June. In a letter to its buyers, the Richmond, California-based producer noted that the increase was in direct response to improved demand and rising feedstock costs during second quarter.

Chevron’s posted price for Group II 100/120 would rise by 9% to $2.33/gal ($708/tonne or €503/tonne) on 1 June, according to data from global chemical market intelligence service ICIS pricing,

The company last moved its paraffinic grades on 30 March, lowering posted prices by 40-75 cents/gal. At that time, crude values averaged in the mid-$30/bbl, but in recent days oil prices have been brushing $60/bbl.

Calumet also announced a 20-cent/gal hike to all grades of both Group I and Group II base oils effective on 1 June. The refiner also said it would lift all naphthenic base oils by 20 cents/gal on 9 June.

Nynas also told customers it would increase prices on all naphthenic base oils by 20 cents/gal, effective on 9 June.

“A price increase was inevitable given rising crude oil and vacuum gas oil values,” a buyer said.

Still, other buyers said any increases would be hard to justify given weak demand.

While June prices are down by around 46% from last year, margins have narrowed considerably, a refiner said.

Chevron’s 100/120 viscosity oil was $4.33/gal at the same time one year ago when crude oil prices were $128.85/bbl.

The market awaited news from other suppliers and wondered whether they would follow suit. Other sellers include ExxonMobil, Sunoco, Valero, Motiva, ConocoPhillips, Flint Hills Resources, SK E&P, Cross Oil, Ergon and San Joaquin Refining.

($1 = €0.71)

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By: Heather McGuire Doyle
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