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Editor Heather McGuire Doyle, heather.doyle@icis.com
NOTE: For full details on the criteria ICIS pricing uses in making these price assessments visit www.icispricing.com and click on “methodology”.
Changes to the above listed Posted Prices (shown in cents per gallon, and effective dates).
Group I base oils
ExxonMobil, 13 July
100: +26
150: +35
250: +22
300/350: +25
600: +30
BS: +10
Holly (Sun), 14 July
70: +26
100: +26, ($2.31)
150: +35
250: +22
500: +30
BS: +10
Valero, 16 July
100: +26
150: +20
500: +5
700: +5
BS: +10
Calumet, 16 July
60: +20
700: +20
BS: +10
Group II base oils:
ConocoPhillips, 15 July
70: +40
75/80: +40
100/120: +35
200/220: +25
600: +30
Chevron, 13 July
100/120: +45
200/220: +20
600: +30
Motiva, 10 July
70: +30
100/120: +35
200/220: +25
600: +30
Calumet, 16 July
75/80: +20
100/120: +20
145/150: +25
300/350: +20
Flint Hills Resources, 4 August
70: +15
75: +15
100/120: +10
200/220: +10
600: +15
Group II+:
ExxonMobil, 13 July
All grades: +20
Motiva, 10 July
110/130: +20
SK E&P, 20 July
All YUBASE: +20
ConocoPhillips, 15 July
50/60 (Ultra-S2): +30
70/80 (Ultra-S3): +30
Group III base oils:
SK E&P, 20 July
All YUBASE: +20
ConocoPhillips, 15 July
4cSt (Ultra-S4): +20
8cSt (Ultra-S8): +25
Group III+:
SK E&P, 20 July
All YUBASE: +20
South America:
PDVSA, 1 September
85: n/c
100: n/c
150: n/c
300/350: n/c
500/550: +20
BS: n/c
NOTE (1): ExxonMobi posted prices were not obtained directly from ExxonMobil, but from other industry sources. Also, a 2 cent/gal discount is applicable for waterborne.
PARAFFINIC
US base oil activity was slow to pick up during the week ended 8 September following the extended US Labor Day weekend.
Heavy neutrals remained virtually impossible to source on the spot market, with some sources saying that there may not be any spot high viscosity base oil available until December at least.
The tightness in the market was a result of several factors including strong demand in June, July and August as players bought for Hurricane contingency plans.
The US government’s “cash for clunkers” scheme which spurred auto sales, also stimulated demand from the finished lubes sector, sources said.
Poor refining economics kept the global supply tight which kept trading capped, sellers said.
With the Brazilian seller Petrobras entering into a 50-day turnaround in early September, players expected bright stock oil to stay tight for some time.
Whether posted base oil prices would change in September was still unclear. The first week of September is still a transition week, a seller said, but if values for crude oil and products go up, then posted base oil prices will also, the seller added.
Analysts still have mixed forecasts on the direction of crude and distillates.
On 4 September, analysts at Barclays Capital said the continuing softness in US distillates demand could sink expectations that crude oil would reach $75/bbl by year end.
Besides curbing momentum in crude, the lack of supportive distillates data continues to weigh on distillates cracks, they said in a commentary. US distillates demand has fallen sharply this year due to the economic slump, which has reduced activity in the trucking and airline industries in particular.
Latest Energy Information Administration (EIA) data show 2009 distillate fuel oil demand at a cumulative average 3.616m bbl/day as of 28 August, down 9.1% from the year-earlier period. Jet fuel demand was down 12.6% at 1.390m bbl/day. In contrast, cumulative average 2009 US gasoline demand was only down 0.7% to 9.000m bbl/day, according to the latest EIA data.
But on 8 September, analysts at Goldman Sachs said that the prompt West Texas Intermediate (WTI) futures contract would be worth about $85/bbl by year's end, or more than $15 bbl above what the January contract fetched going into Labor Day weekend.
Goldman Sachs predicts that the pace of de-stocking of all inventories has slowed and that will fuel a rebound in trucking activity that should be significant and swift.
| Feedstocks | 8 September | 1 September |
| Low Sulphur Vacuum Gas Oil | WTI +$6.00 or $1.84/gal | WTI +$6.50 or $1.78-1.79/gal |
| High Sulphur Vacuum Gas Oil | WTI +$4.50 or $1.80/gal | WTI +$5.00 or $1.74-$1.75/gal |
| West Texas Intermediate (WTI) crude | $71.10/bbl or $1.69/gal | $68.05/bbl or $1.62/gal |
| Natural Gas | $2.807/MMBtu | $2.821/MMBtu |
| Fuel Oil | $66.50/bbl or $1.58 | $65.75/bbl |
NAPHTHENIC
Caribbean Posted Prices, effective 24 August
60: +5
100: +5
750: +15
2000: +15
Naphthenic base oil values have surged in recent days as a result of tight supply and improved demand.
Nynas lifted its heavy viscosity base oils, 500 and up, by 20 cents/gal effective on 8 September. Ergon told buyers it would raise prices of heavy grades by 20 cents/gal effective on 15 September.
San Joaquin Refining (SJR) lifted its prices for select accounts by 10-15 cents/gal on 4 September.
Other sellers were moving up prices on an account-by-account basis, they said. Temporary voluntary allowances (TVAs) were removed on some accounts getting most players to a minimum price of around $2.50/gal by mid month, players said.
Several crude-based contracts also moved up on 1 September, depending on grade and account terms.
There continued to be a handful of long-term buyers who could receive product from some suppliers at around $2.25/gal during the first half of September, players said.
Supply for Pale 750 was tight with offers quoted around $2.40-2.50/gal for second-half September lifting.
Inventories for Pale 2000 were low, and some sellers on the US Gulf Coast said that spot would not be available through the end of the year. Some material was still available on the West Coast however, with prices quoted around the midpoint of the ICIS range, sources said.
In production, Ergon will have a 4-5 day shutdown at its Vicksburg unit in Mississippi in October. The refiner is out of the spot market as a result but said the turnaround should not affect its core customers.
EUROPE AND ASIA MARKET
In Asia, higher offers in the range of $850/tonne CFR China/ SE Asia continued to be heard for heavy grades on the back of tight supply. However, there was resistance among buyers to procure at higher values amid the uncertainty over future pricing. The turnaround season of Chinese base oil refineries was coming to an end and smoother domestic supply was expected in the coming months. Sellers, however, maintained that the slowdown was partly due to the upcoming 10-day holiday for Golden Week starting 1 October. Sellers said that the peak season would start after the holidays and that could trigger a revival in buying.
European export prices moved higher at $735-750/tonne for SN150, $755-770/tonne for SN500 and $880-905/tonne for brightstock, all on an FOB EUR basis. Traders expressed concern that price differentials between Europe and its export destinations were not wide enough to promote the flow of arbitrage cargoes.
SHIPPING
FIXTURES
n/a
ENQUIRIES:
n/a
This week on ICIS news ( www.icis.com ):
08-Sep-09 20:37 US crude futures surge $3.08 on dollar weakness
08-Sep-09 19:29 US petchem plants storm-free as hurricane season enters peak
08-Sep-09 19:11 Mexico appoints new Pemex head, seeks increased oil output
04-Sep-09 17:45 Canada's Suncor to cut 1,000 jobs on merger with Petro-Canada
04-Sep-09 16:47 Soft US distillates demand may stop crude rise
The 6th Middle Eastern Base Oils & Lubricants conference
13-14 October 2009, the Grand Hyatt, Dubai
www.icis.com/mebaseoils09
The 5th Pan-American Base Oils & Lubricants conference
3-4 December 2009, New York
www.icis.com/panamericanbaseoils
