US base oil spot prices rise on snug supply

23 April 2014 20:59 Source:ICIS News

HOUSTON (ICIS)--US base oil spot prices are rising on snug supply in some viscosity grades and tight supply in the heavy neutral grades, sources said on Wednesday.

“Heavy neutral supply is very tight,” one source said.

“We have no material for spot business,” a supplier commented.

Heavy neutral Group I 600 viscosity grade base stocks were most recently assessed at $3.85-4.00/gal FOB (free on board) USG (US Gulf), rising over 25 cents/gal from February/March prices on the strength of narrow supply and March/April posted price increases by all base oil producers.

Group I brightstock spot prices were most recently assessed at $4.15-4.25/gal FOB US Gulf, also gaining about 20 cents/gal over first quarter prices on similar fundamentals.

Base oil producers cut back on production during the first quarter as high feedstock vacuum gas oil (VGO) costs erased profit margins, causing refiners to push the crude oil to make fuels rather than the base stocks, sources said. 

The tight supply situation is also underpinned by several maintenance turnarounds, including one at Paulsboro Refining Company (PRC) in March and Calumet Specialty Products’s upcoming maintenance work scheduled to begin 28 April and extend to 14 May.

“We are entering the turnaround on very low inventories,” Calumet commented.

Follow Judith on Twitter

By Judith Taylor