OUR OBSERVATION
Dear Readers,
October came in quietly—but it didn’t coast. With Q4 kicking off, base oil buyers and sellers are shifting into that familiar fall rhythm. Planning for year-end blends, managing rail and freight availability, watching margins—it’s all on the table. But unlike years past, this October didn’t open with any fireworks. Instead, what we got was a steady, cautious beat. No panic. No rush. Just well-paced supply, selective demand, and a market that feels like it knows what it’s doing.
Let’s walk through how this month unfolded.
Market Overview
Let’s start with Group I, where SN 150 held relatively firm thanks to modest regional output and limited surplus. Meanwhile, SN 500 and bright stock continued to slide as export interest remained light—particularly into India and parts of Southeast Asia. Most producers reported no major issues, just soft fundamentals and a market that wasn’t inclined to chase barrels. Some flexibag availability returned from offshore origins, but domestic producers largely stayed the course: keep it moving, keep it controlled.
In Group II, the story stayed familiar—but with one important variable coming into play. 100N held steady, supported by consistent contract demand and well-managed refinery output. Heavier grades like 220N and 600N remained under pressure, with multiple U.S. producers quietly testing export lanes to Asia and the Middle East to relieve tank levels. One event that did catch the market’s attention was the turnaround at EP, which kicked off earlier this month. While it offered some near-term relief, the general sentiment is that once the unit comes back online, the market could be staring at even more Group II supply heading into late Q4. For now, most buyers continued to pull on a just-in-time basis, avoiding any speculative buildup.
Group III did its usual thing: quiet, steady, and full of nuance. Imports from Korea and the Middle East arrived on time, but spot buying was limited. Most activity stuck to contracts. There was a little chatter around softening on the 8cSt cut—industrial demand just hasn’t returned to earlier-year levels—but otherwise, pricing held stable. Off-spec material found a home via coastal discounting, but the broader market was unmoved.
Logistics stayed relatively calm but didn’t smooth out completely. Railcar delays on inland moves and intermittent port congestion—especially on the East Coast—created the usual headaches. Nothing severe, but enough to keep supply planners cautious. Crude moved upward mid-month, nudging gasoil-linked base oil margins slightly, but not enough to shift any real momentum.
So far, Q4 is off to a quiet start. But even as the month unfolded with consistency, one topic came up again and again: supply outlook. With EP in turnaround and other units operating at steady rates, the market is eyeing what happens next. Once full production returns, many believe we’ll enter a broadly long position—not just for Q4, but well into 2026 & Possibly 2027. Inventories are stable, buyers are focused, and the whole market feels like it’s breathing through the final stretch of the year. The key word this month? Consistency—with just enough friction to keep things interesting.
RECENT HEADLINES
U.S. REFINERIES
Chevron Payments Make up Nearly 24% of Richmond General Fund, California City Reveals Accidentally
Chevron paid Richmond more than $58.8 million in taxes and settlement payments — nearly 24% of the city’s budgeted general fund revenue — last fiscal year, according to a spreadsheet sent to Richmond in response to a public records request.
Taxpayer information is typically kept private under state law and city code, but the city said it “inadvertently” released the information in response to a May public records request.
Richmond requested Chevron’s tax and settlement payment records because the refinery is the city’s largest employer and single largest taxpayer, and because, historically, it has disputed how much it should pay in taxes.
Most recently, the company agreed to pay the city a $550 million settlement over 10 years to avoid a “ Make Polluters Pay ” measure from being placed on the ballot. If approved by Richmond voters, the measure would have increased taxes on refinery operations. The company has made the first of five annual $50 million settlement payments. Then, the annual settlement payment will be $60 million a year for five years.
Chevron leaving California is not out of the question. Continue Reading Here
Valero says moving ahead to shut California refinery after talks with officials
We have been in discussions with California, but nothing has materialized out of that, and so as a result nothing has changed,” General Counsel Rich Walsh said during the company’s earnings conference call.
Valero (NYSE:VLO) said in April it would cease refining operations at Benicia by the end of April 2026, while recording a combined $1.1B pre-tax impairment charge for the Benicia and Wilmington refineries in California.
The California Energy Commission and state officials reportedly have been working to find a buyer for the Benicia refinery and exploring other options to keep the plant in operation. Continue Reading Here
NON U.S. REFINERIES
Russia’s Lukoil says it plans to sell international assets due to Western sanctions
On October 22, U.S. President Donald Trump imposed Ukraine-related sanctions on Russia’s largest oil companies, Lukoil and Rosneft.
On October 15, Britain also targeted Lukoil and Rosneft, as well as 44 so-called shadow fleet tankers, mainly consisting of aging tankers with opaque ownership, in what it described as a new bid to tighten energy sanctions and choke off Kremlin revenue.
Moscow-headquartered Lukoil accounts for around 2% of global output. Its name derives from three oil towns in Lukoil’s traditional exploration region of western Siberia: Langepas, Urai and Kogalym. Continue Reading Here
BP flags weaker oil trading while upstream output grows
Energy companies almost never give details of their trading results in order to protect their commercial advantage. It had previously said it expected slightly lower upstream output than in the second quarter when it produced around 2.3 million barrels of oil equivalent per day. BP guided for a rise in its refining indicator margin to $15.8 per barrel in the quarter, versus $11.9 per barrel in the previous quarter.
REFINING MARGINS PROVIDE BOOST
The higher refining margins are set to add $300 million to $400 million to BP’s results, although some of that will be countered by compliance costs and an unplanned outage at its U.S. Whiting refinery, which was hit by flooding. Continue Reading Here
THE CRUDE SIDE
US Crude Oil Inventories Continue to Fall Despite Glut Narrative
The American Petroleum Institute (API) estimated that crude oil inventories in the United States saw a large dip of 4 million barrels in the week ending October 24, when analysts had expected oil inventories to contract by a smaller 2.9 million barrels.
Crude oil inventories in the United States are so far showing a net loss of 6.4 million barrels for the year, according to Oilprice calculations of API data. Continue Reading Here
What New U.S. Sanctions on Rosneft and Lukoil Mean for Russia’s Oil Trade
Analysts expect India to reduce imports of Russian crude under U.S. pressure but refrain from completely stopping them.
Technically, India could replace Russian oil with barrels from the Middle East, Latin America or the U.S., said Kpler analyst Sumit Ritolia. OPEC members are estimated to hold more than 3 million barrels per day of spare capacity that could help fill any gap. Continue Reading Here
Surprising Fun Facts About the Oil Industry
- The discovery of the Spindletop salt dome in Texas in 1901 triggered an oil rush: over 1,500 new oil companies were chartered within a year of the find.
- In the nineteenth century, the vast majority of global oil production (about 97%) came from just two regions: the U.S. and the Russian Empire (in what is now Azerbaijan).
- Some of the earliest oil wells spewed uncontrolled fountains of oil—known as gushers or blow‑outs—because there were no pressure‑control systems in place. These wells could shoot oil hundreds of feet into the air.
- The world’s first offshore oil “rig” was actually constructed on pilings in a lake (the Summerland Oil Field, California, 1896) before offshore in high seas became common.
- The U.S. has produced a staggering share of global oil: since 1900 the world has produced about 1.5 trillion barrels of oil, and the U.S. has accounted for roughly 17% of that total.
- The measurement unit “barrel” (42 U.S. gallons) endures, though the industry rarely uses actual wooden barrels anymore—its origins trace back to early American oil storage
SUGGESTED READING
“Oil Capital: The History of American Oil, Wildcatters, Independents and Their Bankers” by Bernard F. Clark, JR.
Behind every oil boom there’s a wildcatter and behind every wildcatter there’s a banker. In Oil Capital, author Bernard F. Clark Jr. uncovers the hidden financial engines that powered America’s oil industry. From early lease sales and high‑stakes jackpots to modern energy finance and independent producers, this narrative bridges the thrill of the wildcatter’s gamble with the precision of the banker’s calculus. A must‑read for anyone who wants to understand how oil deals got done and how capital turned petroleum into power.
WE’VE COME A LONG WAY!
Thank you for joining us in this edition of the Beyond the Barrel Newsletter. As we navigate the opportunities and challenges of 2025, we remain committed to providing you with valuable insights. Feel free to reach out to the Signal Fluid Solutions team for any inquiries or discussions.