The Base oil prices in the USA have continued to remain stable as May 2025 begins, influenced by a balance between supply and demand. Snug supply conditions due to earlier turnarounds in April 2025 were offset as base oil units came back online as May began. Simultaneously, any anticipated restocking of base oil ahead of the summer driving season was counteracted by tariff-related uncertainties, leading to a stable supply and moderate demand. Moreover, a decline in feedstock crude oil prices since April 2025 further lowered the manufacturing costs of base oil.

Key Takeaways:

• In April, several plant shutdowns have tightened the base oil supply including Chevron and Pascagoula.
• Restart of Pascagoula, Mississippi following the turnaround eased the base oil supply in May 2025.
• A continuous decline in the feedstock oil prices lowered the production costs of base oil.
• Anticipatory high demand for base oil ahead of the summer buying season has failed to materialize.
• Despite the exemption of base oil from the tariff, demand from the downstream lubricant sector remained muted.

As per ChemAnalyst, base oil prices in the USA are expected to decline in the upcoming weeks as an anticipated increase in the supply of feedstock oil by OPEC+ is probable to lead to lower manufacturing costs for base oil.

As per the recent assessment, base oil prices in the USA remained unchanged as May 2025 began. Base oil supply in the USA remained balanced as May began. Previously, supplies of multiple Group II grades were tight due to ongoing plant turnarounds, including Chevron's at Richmond, California, and Ergon's at Newell, West Virginia.

However, the subsequent resumption of production at several plants, notably Chevron's Pascagoula, Mississippi, Group II facility, allowed more products to re-enter the supply system. Chevron's Pascagoula plant, in particular, was well-prepared with inventory and anticipated a 10% yield increase with a new catalyst after its month-long maintenance.

Moreover, lower crude oil feedstock prices helped offset some of the previous supply tightness by reducing manufacturing costs for base oil producers. Crude oil futures had been on a downward trend since early April, plunging further after OPEC+ announced an increase in crude oil output for June.

While some base oil consumers were observed to be restocking ahead of the summer driving season, this anticipation was largely offset by other market dynamics. Historically, consumption of heavier base oil grades typically increases before summer for use in the downstream rubber and tire industries. However, recent tariff-related disruptions in the automotive sector were noted to have curtailed these requirements, leading to lagging demand in this segment despite the seasonal expectation.