ILMA Compoundings – November 2018 - 18

INDUSTRY RUNDOWN

Market Report
Base Oil Prices Down

Rising supply amid changing demand requirements between Group II and Group III combined with lower crude
oil prices to push down base oil prices in August. Base oil
prices had been on an upward track during the first half
of 2018, with many buyers expecting a price drop long
before it actually happened in August.
By August, the combination of rising supply in Group
II and lower crude oil prices in West Texas Intermediate
(WTI) and Louisiana Light Sweet (LLS), which closely
aligns with Brent, brought about a generalized fall in posted
prices in Group I and Group II base oils.
Calumet's Group I base stock posted prices moved down
20 cents per gallon effective Aug. 23 on its heavy-grade 700
viscosity, but the company elected to not lower posted prices
on bright stock. Group I producer HollyFrontier confirmed
reducing posted prices by 10 cents per gallon on light- and
mid-viscosity grades effective Aug. 21. HollyFrontier did not
TWO CRUDE OIL PRICE TRENDS AND THE AUGUST DIPPING POINT
80
75

USD/bbl

70
65
60
55
50
45

Nov '17

Jan '18

Mar '18

May '18

Crude LLS FIP St. James, LA Assessment Spot Month Closing Value
Crude WTI FIP Cushing, OK Assessment Spot Month +1 Closing Value

NOVEMBER 2018

| COMPOUNDINGS | ILMA.ORG

Jul '18

Sept '18
©2018 ICIS

-0.5

2.5

-1

-1.5

1.5

-2

Dated (Urals NWE)

By Judith Taylor

Dated (Azeri)

Shifting supply/demand and
lower crude oil push

THE IMPACT OF LIBYA AND IRAN ON DIFFERENTIALS

-2.5

0.5
0
Jun

Jul
Azeri Light

-3
Sept

Aug
Urals NWE

move posted prices on its heavy 525 viscosity base stock or
on bright stock. Paulsboro Refining Co. (PRC) confirmed
10 cents per gallon decreases on its Group I light- and
mid-viscosity posted prices, with 20 cents per gallon reductions
on its 500- and 700-viscosity base stocks effective Aug. 24.
No changes were made to the bright stock posted price.
According to buyers and sellers, ExxonMobil decreased
posted prices on its Group I light- and mid-viscosity base oil
grades by 10 cents per gallon and its 600 grade by 20 cents
per gallon effective Aug. 21. Bright stock posted prices were
not reduced. ExxonMobil does not discuss its prices per
company protocols.
Underpinning for the posted reductions were slightly
different between the types, as crude oil was more influential
with Group I posted decreases while Group II decreases were
more nearly founded on supply/demand factors.
U.S. Group II base oil posted price reductions were
fostered by supply length in most viscosity grades, with
decrease announcements by Calumet, PetroCanada, Excel
Paralubes, Chevron and Motiva. PetroCanada did not
change posted prices on the 350 grade or on its 600 grade,
and Chevron did not adjust the posted price on its 100
viscosity. PetroCanada also reduced the posted price on its
100 viscosity Group II+.
Buyers' input confirmed that ExxonMobil reduced prices on
its Group II grade, a 200/220 viscosity product, by 10 cents per
gallon effective Aug. 21 and on its Group II+ posted price.
Group II base oil decreases began with Motiva going
sharply down on its Group II posted prices effective Aug. 6.

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ILMA Compoundings – November 2018

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