US Group II base oil margins rise on firm demand

Market: Oil products
04/03/25

Domestic Group II base oil margins rose for the week ended 28 February as spot prices increased on the back of firmer seasonal demand.

The Argus Group II N100 premium to four-week average low-sulphur vacuum gas oil (VGO) rose to $1.01/USG from 98¢/USG last week. Margins remained above year-earlier levels of 86¢/USG.

The Argus Group II N100 premium to four-week average US Gulf coast (USGC) diesel was 75¢/USG, up from 74¢/USG the week prior. Margins remained above year-earlier levels of 44¢/USG.

Domestic Group II light-grade spot prices edged up on firmer demand from seasonal factors. Demand typically picks up leading into the summer because of increased driving activity.

Supplies also tightened as Chevron is planning a 3-4 week turnaround at its 25,000 b/d Group II base oil unit in Pascagoula, Mississippi, in March and April.

Four-week average VGO prices rose on reduced supply availability, which is partially attributed to multiple refinery turnarounds. Several turnarounds are expected to wrap up by the end of March and ease some constraint on VGO volumes.

The low-sulphur VGO premium to four-week average WTI crude widened to $17.49/bl from $16.78/bl last week.

Weaker diesel and gasoline markets are keeping VGO margins depressed. This is pushing more VGO toward base oil production.

By Karly Lamm

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