Dated deliveries of Brent crude posted around $61.30 per barrel in London Tuesday afternoon for December front month trades. West Texas Intermediate also rose, hitting $54.45/bbl for December front month, which widened the crack between the markers to nearly $7/bbl. ICE LS Gas Oil climbed to $552 per metric ton for November front month, some $30/t higher than last reported one week ago.

Europe

Prices for API Group I exports in Europe were unaltered this week, showing no impacts yet from crude trends. That may change yet, although the overall sentiment around the market is that avails have greatly improved over the last month or so, and demand is expected to slow through the end of the year, which would tend to counter producer proclivity to hike prices.

Light solvent neutral grades remain between $695/t and $725/t, while SN500 and SN600 are $765/t-$790/t. Supplies of bright stock are plentiful in large and small quantities, and with a drift in demand from export locations such as Nigeria over the last few weeks, offers are flat at $835/t-$865/t in offers, though many suppliers are keen to move this grade and may be willing to trade off on price for prompt shipment.

The prices above refer to large, cargo-sized parcels supplied or offered FOB ex-mainland European supply points.

Group I trade within Europe is relaxed but is anticipating that prices could climb for November sales. Buyers report that they have not received many notices from suppliers of impending increases. Some buyers are also commenting that sellers have ample stocks in hand, and with the years end approaching, inventories are being closely monitored to avoid large stock positions at December 31.

This is not to say that demand is flagging, as business in Northern Europe, Scandinavia and the United Kingdom remains brisk. Next week may bring more clarity about the direction of prices, which for now are stable. The differential assessed for domestic FCA prices over spot export levels is maintained at 55/t-75/t.

Market sources report that Group II sellers are relieved by crude and feedstock cost increases, contending that these justify current Group II values. Availabilities are starting to return to recover from disruptions caused by hurricane damage along the U.S. Gulf Coast.

Prices are maintained this week at $660/t-$685/t for light-viscosity grades and $770/t-$810/t for 500 neutral and 600N for large bulk cargoes landed CIF into Antwerp-Rotterdam-Amsterdam. FCA or ex-tank prices are assessed at around 755/t-790/t for light-vis oils and 845/t-880/t for higher-viscosity grades.

European Group III prices are stable at $775/t-$810/t for 4 centiStoke and 6 cSt grades, basis CIF Northwestern Europe. FCA prices for euro sales are said to be 685/t-705/t, FCA northwestern Europe. Fully approved grades, mainly from incumbent European suppliers, on basis FCA Antwerp-Rotterdam-Amsterdam, are 780/t-815/t for 4 cSt and 6 cSt material, with 8 cSt at around 755/t-775/t.

These prices refer to ex-rack sales or truck-delivered quantities of Group III and do not pertain to large bulk deliveries to majors and distributors, which may be discounted $65/t-$90/t.

Baltic and Black Seas

Reports from the Baltic this week suggest that incoming and cross-sea cargoes of various types of base stocks including naphthenics and used lubes outweigh the Russian Group I material being exported from this region. This may be temporary and may be due to the lack of large West Africa parcels flowing from Baltic supply points, only a few smaller regional cargoes are visible being placed into the east cost of the U.K. and Antwerp-Rotterdam-Amsterdam.

There are a couple of large Nigerian inquiries for November loading, although prices have not been settled. FOB prices are not disclosed for these large parcels, but working on a netback basis, using average and reported freight rates, Baltic loaded prices can be reasonably assessed. Operators in the Baltic are talking prices higher for Nigerian offers by around $20/t-$25/t across the board, and although no trades have been completed this may be a sign for the future.

Prices for this week remain in the same ballpark as previously reported with Russian export barrels maintained at $695/t-$725/t for SN150 and $765/t-$780/t for SN500 on an FOB basis. SN900 in bulk is assessed at $865/t-$880/t, while bright stock is $895/t-$945/t.

Black Sea Turkish receivers report a relatively large number of imports from various sources around the Black Sea , Mediterranean and Northwestern Europe covering various qualities and types of base oil. Russian material ex-Kavkaz, Russia, has been noted in a couple of large cargoes moving north to Rotterdam through Greece, with another parcel moving south to Middle East Gulf receivers. These cargoes purportedly consist of SN900 and some SN500, both keenly priced on an STS basis. SN500 ex-Azov is also noted at around $785/t-$795/t delivered CIF into Turkish ports such as Gebze and Aliaga.

There are also a number of contract Mediterranean cargoes from Greek suppliers finding their way into Derince, Turkey. Prices are assessed a little higher this week for light neutral grades, since both FOB levels and freight rates have seen upward moves, with levels now being assessed at $745/t-$760/t for SN150 and SN600 maintained at around $795/t-$825/t, CIF. Cargoes of Group III base oils ex-Spanish Mediterranean are reported by sources to be priced at $785/t-$800/t delivered CIF Gebze for 4 cSt and 6 cSt grades.

Middle East Gulf

The usual flow of material in and out of the Middle East Gulf continues with Iranian premium SN500 reported loading out of both Bandar Bushehr and Bandar-e Emam Khomeyni for Mumbai anchorage and Hazira, India, discharge. FOB levels are reported as firmer this week, with material from Sepahan Oil being raised $10/t in CIF offers, the assumption being that with freight rates remaining flat, realizations or margins are increased at the FOB stage. These prices are now appraised at $765/t-$775/t FOB.

Incoming cargoes have been reported loading out from the Black Sea, with around 7,000 tons of base oils being sold to United Arab Emirates receivers. Prices for these quantities of SN900 and SN500 are expected to be around $875/t and $790/t, respectively, bringing the SN500 price marginally below the level for the similar grade coming out of Iran.

Other exports obviously contain reference to the Group III grades being produced at plants in Bahrain, Qatar and in Abu Dhabi, United Arab Emirates. Al Ruwais cargoes are more evident with notable quantities of around 25,000 tons moving to the west coast of India and Sharjah.

The plant in Sitra, Bahrain, has been a joint venture between Neste and Bahrain Petroleum Co., with Neste having rights to market 100 percent of the base oil output. The partnership is dissolving, though, and sources say the new arrangement will give Bapco rights to market 55 percent, though Neste could have access to more than 45 percent under certain conditions. This information is uncorroborated, and facts are being sought from the partners.

Notional pricing for Group III movements is maintained with FOB levels netting back to around $675/t-$695/t for 4 cSt and 6 cSt grades loading out of Al Ruwais. Grades ex-Sitra marketed by Neste may achieve higher levels since they hold more world-wide finished lubricant approvals, and are estimated at $745/t for 4 cSt and 6 cSt and $725/t-$735/t for 8 cSt.

These notional FOB levels refer to oils delivered on a CIF basis in large cargoes and parcels to major buyers or appointed distributors.

Group II stocks imported from Far East sources are assessed higher this week by around $10/t, and are seen in offers at around $650/t-$665/t for light-vis grades and $835/t-$860/t for 500N and 600N, CIF Middle East Gulf ports. One large U.A.E. blender confirmed that Group II wll become a major staple base stock for the production of a new range of automotive lubricants due to be rolled out early next year. The same source did not mention or confirm if it intends to tap output from the looming upgrade and expansion at a Luberef plant in Saudi Arabia, but the timing suggests that may be the case.

Local avails of smaller quantities of Group II material imported from the Far East and the U.S. is available on an FCA or delivered basis ex-U.A.E. Prices are estimated now at $795/t-$855/t for 100N, 150N and 220N, with 500N and 600N still at $855/t-$925/t, delivered throughout Middle East Gulf locations. Prices will vary on distances from primary storage, and quantities being shipped, and also whether delivered by tote or truck.

Africa

A number of inquiries have been circulated for material moving into North African receivers in Morocco that will possibly be covered out of Spanish or Italian sources. In South Africa a cargo identified and nominated by shipping agents in Durban has been confirmed as loaded during second half October. The quantities are undisclosed as yet, although agents suggest that around 11,000 to 12,000 tons of material is on board.

West Africa receivers in Cote d’Ivoire, Guinea and Togo are expecting delivery of relatively large quantities of base oils supplied from Livorno, Italy, and it is understood that none of this 8,000 tons cargo will be discharged into Nigeria. Often to take advantage of freight savings, cargoes for these other West Africa ports are combined in tandem with material going into Nigeria, although with a parcel of around 8,000 tons perhaps no advantage is to be gained if the optimum vessel is chartered.

Nigeria remains quiet with only a couple of smaller requirements being discussed with suppliers out of the Baltic for parcels of 4,000 to 6,000 tons. Receivers in Lagos have commented that they are not requiring any urgent replacement stocks at this time, and that they prefer to wait until December to see if they can pick up any year-end bargains from the base oil markets. Some are hoping for large discounts to current offered prices, but suppliers are informing these buyers that they may not be in a position to offer lower prices during December.

Even now, sellers are looking to increase prices for future cargoes going into Nigeria and have indicated this week that come the middle of November, they expect that prices will have risen by around $25/t-$40/t for Russian export barrels.

Current offers are starting to reflect these moves, and although there are few reports of business being fixed at the new levels, offered prices from Baltic sources now reflect levels delivered into Nigeria at CIF/CFR values of $875/t-$890/t for SN150 and $920/t for SN500. Russian SN900 in bulk is revised upwards to $995/t-$1,025/t, while bright stock remains at $1,055/t-$1,075/t.

Prices reported are for Group I base oils delivered CIF/CFR to Apapa, Lagos or Port Harcourt, Nigeria.

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