According to my dealer they are NOT using synthetic. I asked the question when they said it was 5k between oil changes. Kinda surprised me. Once I get done with my free services (2 more) I'll be switching.

My dealership just switchec to Castrol synthetic blend oil.

my dealer offers Mobil 1 if you want a synthetic, but they say if you change your oil regularly that you really do not need synthetic 

that is why i like to use the Toyota OEM filter - it has a vacuum seal that keeps all of the oil from draining into pan so engine is lubed on a cold start 

FYI:

Among regular oils (non-synthetic), Pennzoil and Valvoline are generally seen as the "best" brands with the best consistency and quality between bottles and a very high reputation on quality.
Castrol regular (GTX) varies greatly in consistency and I've been told (not proven to me) that they don't always make what they sell as GTX.  They DO make their Syntec, synthetic and it is highly reputable.
Mobil 1 is a high reputation synthetic.

In comparison charts, such as that used by Amsoil, they compare themselves to Mobil 1 Synthetic and Pennzoil regular, as the "best of the others."  Their intent is to show how they beat everyone else, but what I noticed was that Pennzoil regulre (non-synthetic) was right up there in quality with the synthetics.  As my main car at the time (a 90 Miata, which I still own) "preferred" natural motor oil (internal engine seal lubrication), I decided that Pennzoil would be a good option to look at.  When I was advised by a Miata specialist that the consistency of Pennzoil was a good match for the Miata, it sealed the deal.

I'm not sure what the preferred oil type (natural/synthetic) or which brand's consistency best matches the xB, I can't make any recommendations.
(I asked the same question in the thread about changing one's own oil in the "Car Care" section/subforum.)

So, does anyone know what TOYOTA uses in the factory in the original oil fill in Japan?
Or is it shipped empty and filled at port or the original dealer of delivery?  (which I would find unlikely)

Mechanics I've talked to seem to favor either Pennzoil or Valvoline and dislike the other for some reason or another.

That reminds me, I was talking to a friend that works on Japanese cars, presently employed by Honda, but formerly with Toyota and an independent shop.
He said that the 2.4 Camry engine, which powers our xBs, is filled with natural oil at the factory.  He also suggested changing the oil at 3,000 miles as the engine has a tendency to "sludge" a bit if the oil is left in for over 5,000 miles.  He also recommended Pennzoil and isn't a fan of Valvoline.
(He is also the one that pushed me to look at the xB OVER the Honda Element, saying that the xB, 2nd generation was a much better vehicle.)

My thought: If you use regular oil, use a good reputable one.  The engine doesn't "need" synthetic, but if you use one, get a good quality one (like Mobil 1).
It doesn't look like it COMES with synthetic from the factory in Japan.
(Anyone want to argue that it does?)

THEY USE A SYNTHETIC BLEND.