Dated deliveries of Brent crude is just below $51 per bbl for December front month, with West Texas Intermediate crude November settlement rising then retreating to $48/bbl. ICE LS Gas Oil traded up some $45/t to $454 per metric ton.

Europe

API Group I base oil levels remain flat, with FOB levels for light solvent neutrals at $475/t-$495/t and SN500/600 at $560/t-$580/t. Bright stock offers continue at $860/t-$890/t, with multiple traders explaining that they are able to get rates some $30/t lower for large parcels of bright stock lifted in tandem with other grades.

Prices above pertain to cargo-sized parcels of Group I supplied or offered on an FOB basis ex mainland Europe.

The inland market was all geared up for Oct. 1 price changes, but sources suggest that they havent taken place. Levels for domestic sales either delivered or ex rack seem to have remained firmly as they were prior to month-end. The market still hints of weaker prices filtering in, but with the small yet significant crude increase this week, any downturn in prices may be avoided. The differential between export and domestic prices remains 80/t-115/t.

Some inland buyers have reportedly been innovative and have either committed to purchase larger sea-borne cargoes from the Baltic under their own auspices or have formed what can only be termed cooperatives with other buyers to purchase these parcels – cutting out traders whilst saving large sums on the purchase.

Some postulate that there are no longer supply options for high-spec Group I and that leading-edge blending operations have opted to move to Group II. Whilst this makes sense, many blenders insist that unless there is a quantum shift to multigrades, they will continue to utilize Group I. However, with ever-increasing quantities of Group II arriving into Europe, it is difficult to see how the march on progress can be contained.

Group II prices are riding in tandem with Group I levels albeit with a differential reflecting specification and properties. However, some importers are trying hard to push levels higher. Some noted that other Group II markets are tightening, and with one major importer about to embark on a major turnaround in the west coast of the U.S., alternative markets may tighten further. However, the commitment has been made to the European market for the future, and with new alternative suppliers hitting the market, it is considered that the European arena will continue to be a focal point for Group II producers in the future.

Prices remain unchanged, with light vis grades between $585/t and $630/t and heavier material 500N and 600N at $725/t-$785/t or euro equivalents. A premium of 50/t-120/t will be applied to grades being redelivered to secondary or distributor storage locations, or for product sold on a delivered basis by truck. Some buyers have commented that they are able to achieve lower prices than the spreads above by buying ex rack/FCA.

Group III prices seem to have gone into freefall in some regions. In Europe, however, levels seem to have moved downwards sharply from the historic levels seen some six months to a year ago, but may have reached a point where suppliers and producers do not want to move further. Yet some sources feel that this may only be a hiatus before prices continue to erode further.

Prices refer only to material sold on an ex-tank or truck delivered basis ex Antwerp-Rotterdam-Amsterdam or other European hubs. Levels of 750/t-770/t are maintained for 4 centiStoke and 6 cSt grades with 8 cSt material around 740/t.

Baltic and Black Sea

Baltic activity has been subdued this week with only a couple of parcels being arranged for discharge into Antwerp-Rotterdam-Amsterdam. There are new problems affecting Nigerian imports again, many of which originate in Baltic ports, and with new restrictions on foreign currency again, this may have an effect on Baltic sales until theres resolution. Prices remain relatively flat with FOB levels for SN150 at $470/t-$490/t and SN500 at $540/t-$560/t. SN900 is heard offered at $658/t FCA, with SN1200 around $675/t basis FCA. There are a couple of oddball enquiries for material to move from Baltic to the Far East with one or two parcels of around 6,000 tons being examined. This arbitrage must be difficult, not least due to freight costs, unless demand for SN900 is tempting some receivers in China.

Black Sea activity is also muted with one 4,000-ton Mediterranean cargo fixed into Derince, Turkey. Other Turkish receivers have issued a number of enquiries for Group I and Group II cargoes, but realistically the Group II business will possibly be handled by distributors representing the major suppliers.

Perhaps Kavkaz, Russia, is being restocked after the large cargoes of around 10,000 tons each loaded last month.

Mediterranean-sourced Group I material is around $525/t in respect of SN150, and around $595/t for quantities of SN500/600. Bright stock as part-cargo is contained in offers ex an Italian port at $878/t CIF this week, but buyers have considered this price too high and are targeting levels some $50/t lower.

Middle East Gulf

Red Sea reports contain enquiry information on further Saudi Arabian contract cargoes moving to Oman and various locations within the United Arab Emirates.

As noted, Group I imports and exports continue, with Iranian sellers appearing back on the market with a cargo for Mumbai anchorage. Iranian SN500 prices appear to be holding and are stable for October offers. Prices for the higher spec SN500 are at $595/t ex Bandar Bushehr, although some Indian buyers are reputed to be asking for delivered prices around these levels. SN150 is estimated at around $525/t FOB Iranian southern ports with U.A.E. FOB levels being quoted at $595/t for this lighter Group I grade. SN650, although not prominent in availability terms, can be had in small quantities at around $510/t.

Group III exports continue, with the new production in Al Ruwais taking coals to Newcastle by exporting a cargo of Group III base oils to South Korea. Further cargoes are earmarked for different ports in India, but may be being received by the same buyer in various blending locations. FOB levels are assessed in a range from $685/t to $725/t for the 4 centiStoke and 6 cSt grades.

Group II activity remains dull, but with more availability from sellers in the Far East, offers for larger quantities are being made to potential receivers throughout the region. Prices may have dipped a little to make these grades slightly more attractive and are assessed at $585/t-$600/t in respect of the range of light vis grades from 100N through 220N, with the heavier vis 500N and 600N also being discounted to $720/t-$745/t CIF. The smaller end of the market for Group II grades continues, with deliveries being made to Middle East Gulf blenders at between $40/t and $120/t higher than CIF levels for large parcels delivered into mainline receivers and distributors.

Africa

South African sources report another significant cargo of base oils being delivered from a refinery in the United Kingdom. This parcel will discharge in Durban for the same major who may be reopening connections with South Africa after being absent from this market for a number of years. There are still smaller enquiries for Group I SN150, SN500, SN900 and bright stock and new offers have been seen this week for delivery in flexies. Prices are $645/t in respect of Baltic SN500, with SN150 at $575/t and lower spec bright stock at $835/t, all basis CIF Durban. European rerefined SN150 is quoted at $522/t CIF Durban.

News from Nigeria is that there are renewed problems for banks accessing foreign currency to be able to open letters of credit for material being imported into Nigerian ports. This again raises the spectre of limiting base oils flow into this country and also encouraging the use of substandard base stocks in finished lubricants.

Certainly a number of cargoes have been successfully delivered or sold and are on the water to receivers in Nigeria, thus avoiding shortages in the near term, but even with some 70,000 tons of base oils having arrived or due to arrive into Nigeria in the next few weeks, this will only postpone the problems of outages.

Group I base oils landed or landing into Nigeria are assessed delivered CIF/CFR at $595/t for SN150 in bulk or $668/t in flexies. SN500 is reckoned to land at $645/t-$660/t. Bright stock either ex Europe or U.S. will be priced on a delivered basis into Apapa at around $945/t, with Russian export SN900 discharging at about $815/t CIF/CFR.

European rerefined SN150 will be delivered locally at $575/t delivered by truck or in flexies. CIF levels at $545/t will only be confirmed after satisfactory payment guarantee arrangements are in place.

Ray Masson is director of Pumacrown Ltd., a trader and broker of petroleum products in London, U.K. Contact him directly atpumacrown@email.com.