US Group II base oil margins rose because feedstock and competing fuel costs fell while spot prices held steady.
The Argus domestic spot US Group II N100 premium to four-week average low-sulphur vacuum gasoil (VGO) rose to $1.12/USG from $1.11/USG last week. Margins remained below year-earlier levels of $1.37/USG.
The Argus domestic spot US Group II N100 premium to four-week average US Gulf coast diesel was 92¢/USG, up from 90¢/USG a week earlier. Margins also rose above year-earlier levels of 90¢/USG.
Group II spot prices were steady last week because refiners were not interested in dropping prices further as buying demand remains weak.
Excel Paralubes' 22,200 b/d base oil unit in Westlake, Louisiana, was also still down for an unplanned maintenance which curbed some downward pressure on growing supplies.
Group II mid-viscosity grade supplies are ample while light- and -heavy grades are balanced.
Four-week average feedstock VGO prices fell on lower crude values and weaker fluid catalytic cracker (FCC) margins. Tighter VGO supplies continued to mitigate some of this downward pressure, keeping demand stable.
The low-sulphur VGO premium to four-week average WTI crude widened to $12.63/USG, up from $12.44/USG last week.
Refiners continue to push more VGO towards base oil production because of weaker competing fuel margins. While base oil demand is lackluster, it remains at a premium to fuels such as gasoline and diesel.
