News and Articles

November – Market and Base Oil Updates

OUR OBSERVATION

Dear Readers,

As we head into December, I want to take a moment to extend the warmest wishes for a joyful holiday season to you and your families. We’re grateful for the thousands of readers who have followed this newsletter over the past 19 years, and we look forward to continuing the conversation well into 2026. This is our second-to-last edition for the year—and the final one before the holidays—so please kick back and enjoy the read.

November came in much as expected: low demand, ample supply, and a market still feeling the aftershocks of months prior. Blenders continue to tread cautiously. While some anticipate further price movement in December, many refiners aren’t rushing to drop numbers, believing it won’t move the needle on demand.

Whispers have begun circulating again about the “nuclear option”—a pullback in production if demand doesn’t improve. But that’s not a cure, just a short-term patch on a long-term issue. The real challenge? Global base oil capacity continues to expand. New supply from Singapore, India, and even U.S. re-refiners has come online in recent months. Yet the volume of finished lubricant production hasn’t budged. So where do all these barrels go?

Export markets are nearing their limits, and the industry is facing a hard truth: someone may eventually have to scale back or step away. Domestic manufacturing in the U.S. is making meaningful strides under the current administration, but it’s not the heavy industrial base of decades past—and it likely won’t hit in earnest for another 3 to 4 years. In the meantime, a bumpier ride is inevitable. The base oil industry has weathered plenty of market cycles before—and what lies ahead will likely look different from the path behind it. But with every shift comes opportunity. The strength of this industry has always been its ability to adapt, and that won’t change any time soon.

Quick Highlights – Group I, Group II, and Group III

Group I supply remains readily available. Some surplus volumes were moved offshore, but overall activity was muted. Key export markets like South America have softened slightly, which has put added pressure on U.S. refiners to identify new outlets. Domestic demand has been subdued, with most producers staying flexible but measured.

Group II remains long to balanced on 220N and 600N. Meanwhile, 100N has been relatively snug—not due to a surge in demand, but rather because some refiners have shifted their production focus toward Group III barrels, trimming Group II output. Re-refiners have also increased their presence in the 100–150 viscosity range with aggressively priced volumes, which has only accelerated the majors’ pivot. Several key turnarounds wrapped up last month, and as units ramp back up, the current tightness on 100N is expected to ease.

Group III pricing was largely stable through November. The notable exceptions were 6cSt and 8cSt grades, which remained longer than 4cSt. While tighter viscosities still traded at steady levels, even these saw price flexibility as suppliers focused on moving volumes before year-end. Market sentiment remains cautious, but inventory levels across most producers were manageable.

So far, November has unfolded exactly as we anticipated. Muted demand, seasonal slowdown, and a market that—while uncertain—isn’t chaotic. As we look ahead to 2026 and even into 2027, all eyes are on how the economy and global manufacturing trends continue to evolve.

RECENT HEADLINES

U.S. REFINERIES

Exxon freezes plans for major hydrogen plant amid weak customer demand

HOUSTON, Nov 21 (Reuters) – Exxon Mobil (XOM.N), has paused plans to build what would be one of the world’s largest hydrogen production facilities due to weak customer demand, CEO Darren Woods told Reuters in an interview on Friday.

The suspension of the project, which had already experienced delays, reflects a wider slowdown in efforts by traditional oil and gas firms to transition to cleaner energy sources as many of the initiatives struggle to turn a profit.

U.S. President Donald Trump had also yanked funding for green initiatives to focus on fossil fuels.

Oil major Exxon announced plans in 2022 to build the plant at its refining and chemical complex in Baytown, Texas, with a goal of producing 1 billion cubic feet per day of so-called blue hydrogen, a clean fuel that produces water when burned.

Potential customers have stayed on the sidelines due to the higher cost of using hydrogen, Woods said, adding that an industrial slowdown and economic uncertainty in Europe have further crimped demand. “There’s been a continued challenge to establish committed customers who are willing to provide contracts for off-take,” Woods said. Continue Reading Here

Chevron Turns to India for Jet Fuel After California Refinery Fire Fallout

India has shipped its first-ever cargo of jet fuel bound for the U.S. West Coast for Chevron amid favorable arbitrage economics and increased import demand following a fire at the supermajor’s refinery in the Los Angeles area in October.

The Hafnia Kallang oil product tanker departed at the end of October from the Indian port of Sikka, from where India’s industrial conglomerate Reliance Industries ships cargoes from its huge Jamnagar refinery,shipping data on Marine Traffic show. Currently the Singapore-flagged Hafnia Kallang is near the Japanese coast bound for the Los Angeles port and expected to arrive in the first week of December.

This is the first-ever jet fuel cargo India has shipped to the U.S. West Coast, traders told Reuters.

Fuel production on the West Coast has been reduced since early October when a fire at Chevron’s 280,000-barrels-per-day El Segundo refinery in the Los Angeles area forced the U.S. supermajor to halt output at some units for repairs. Continue Reading Here

This is what could replace the Phillips 66 oil refinery in Wilmington

Oil giant Phillips 66, operator of a massive oil refinery near the Port of Los Angeles, has unveiled plans to replace its belching smokestacks and hulking steel tanks with stores, restaurants and soccer fields.

Phillips 66 announced last year that it would close the century-old refinery and remove it to make way for a new development intended to provide services and recreation for people who live nearby, along with warehouses to serve the port.

The refinery in L.A.’s Wilmington neighborhood received its last shipment of crude oil in September and should have it all processed by mid-October, Phillips 66 said. Continue Reading Here

NON U.S. REFINERIES

BP in Active Talks With Stonepeak Over Castrol Sale, Sources Say

The sale process for ‌Castrol began earlier this year after the London-listed oil major said in February it had put the century-old lubricants business under review as part of a broader strategy ‌shift away from renewable energy.

In September, both Stonepeak and private equity firm One Rock submitted bids for the unit, one of the people and a third one said, speaking on condition of anonymity because the matter is private. The sources cautioned a deal may not materialize.

Reuters could not determine whether BP is still in discussions with One Rock or any other parties, and details about the value or structure of Stonepeak’⁠s offer also could not be learned. ‌Market expectations, according to RBC analysts, place the value of the Castrol sale at around $8 billion in recent weeks. Continue Reading Here

Aramco Unveils $30 Billion in New U.S. Deals at Washington Investment Forum

Aramco announced 17 new agreements and memoranda of understanding with American companies worth more than $30 billion, expanding its U.S. partnership footprint as part of its long-term growth strategy.

The key development is Aramco’s latest wave of U.S.-focused collaborations—spanning LNG, supply-chain procurement, advanced materials, and financial services—building on 34 MoUs announced in May. Together, the two rounds represent around $120 billion in potential U.S. partnership opportunities, underscoring the Saudi company’s accelerating engagement with American industry.

The announcements coincide with the U.S.–Saudi Investment Forum 2025 in Washington, DC, and reinforce Aramco’s nearly century-long commercial relationship with the United States. The company has been steadily widening its global gas and downstream footprint, while U.S. LNG investments have become a priority for Gulf NOCs seeking supply security and portfolio diversification. The new MoUs also come as U.S. service companies deepen their presence in Saudi Arabia’s upstream and manufacturing ecosystem, while U.S. financial institutions continue to capture mandates linked to Aramco’s investment arm. Continue Reading Here

THE CRUDE SIDE

U.S. Crude Oil Stockpiles Rise as Production Hits Record

U.S. crude oil inventories increased more than expected last week as U.S. production hit a record high and exports fell, according to data released Thursday by the U.S. Energy Information Administration.

Commercial crude oil stocks excluding the Strategic Petroleum Reserve rose by 6.4 million barrels, to 427.6 million barrels, in the week ended Nov. 7, and were about 4% below the five-year average for the time of year, the EIA said. Analysts in a Wall Street Journal survey had expected a 400,000 barrel crude stock build.

U.S. crude oil production rose by 211,000 barrels a day, to just under 13.9 million barrels a day, the highest on record, according to EIA estimates. Crude imports were down by 703,000 barrels a day, at 5.2 million barrels a day, while exports fell by 1.6 million barrels a day, to 2.8 million barrels a day. Continue Reading Here

Reliance stops buying Russian crude at major refinery to comply with US sanctions

India’s largest private oil refiner, Reliance Industries, has said it has stopped using Russian crude at one of its largest refineries, as it rushes to comply with US and EU sanctions. India had become the biggest buyer of cheap seaborne Russian crude since the full-blown war in Ukraine started in 2022. US President Donald Trump this year criticised India for supporting Moscow and imposed an extra tariff on New Delhi as trade tensions soared. Despite the pressure from Washington, Indian companies had continued to import oil from Russia until Trump escalated sanctions against Russian producers Rosneft and Lukoil in October. The sanctions took effect on Friday. Continue Reading Here

Saudi Crude Oil Exports Soar to Seven-Month High

Saudi Arabia’s crude oil exports hit a seven-month high in September as its production jumped to a 29-month high, the latest data by the Joint Organizations Data Initiative (JODI) showed on Wednesday.

Even as Saudi refinery runs rose by 38,000 barrels per day (bpd) in September from August, crude oil shipments from the world’s top crude exporter increased by 53,000 bpd, according to the data.The increase may not seem much but it was the highest level since February and above the 2020-2024 five-year average for the second consecutive month.

Saudi Arabia’s crude oil production, meanwhile, jumped by 244,000 bpd from August to a hit a 29-month high in September as the Saudi-led OPEC+ group accelerated the unwinding of the cuts this summer, citing low inventories, healthy fundamentals, and a steady global economic outlook.. Continue Reading Here

Surprising Fun Facts About the Oil Industry

Octane Ratings Started Because Early Gasoline Was Terrible – In the 1910s–20s, gasoline quality varied so wildly that cars would knock loudly or stall — the octane rating system was invented just to standardize fuel stability.
Oil Tankers Once Loaded Through Zip-Line Hoses – Early tankers in the 1890s didn’t tie up at docks. They floated offshore, and long canvas hoses were “zip-lined” across from barges to load crude.
The First Gasoline “Station” Was Just a Kerosene Wagon – Before gas stations existed, early motorists bought gasoline from horse-drawn kerosene wagons that also sold lamp oil.
WWII Forced Refineries to Invent 100-Octane Aviation Fuel – The U.S. and UK developed super-high-octane gasoline for fighter planes, giving Allied aircraft a crucial performance edge in dogfights.
Oil Was First Used for Medicinal Purposes – In the mid-1800s, crude oil was sold in small bottles as a “healing oil” called Seneca Oil, marketed to cure arthritis, rashes, and aches.
Early Oil Wells Were Pumped by Horses – Before steam power reached the fields, some of the earliest wells used horse-powered walking beam mechanisms to pump crude out of the ground.
Offshore Drilling Started in Just 15 Feet of Water – The world’s first offshore well (Summerland Field, 1896) was drilled from a wooden pier, proving offshore drilling long before technology existed for deep water.
The First Oil Pipeline Workers Rode Bicycles – To spot leaks and check valves along early pipelines in the 1870s, inspectors used bicycles because they were faster and quieter than horses.
Oil Helped Invent Suburban America – Cheap gasoline after WWII allowed families to live farther from city centers — directly fueling the post-war suburban boom and highway expansion.
Oil Drum Colors Actually Mean Something – Before standardization, different refiners painted their barrels specific colors so customers could recognize their brand instantly — early marketing in the oil world.

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.

News and Articles

November – Market and Base Oil Updates