Operating rates have improved at U.S. facilities damaged by Hurricane Harvey, but spot cargoes remain scarce, sources said. Buyers commented that a couple large producers were not participating in the spot market but were likely to have more supply by the end of November or December.

Most U.S. suppliers were trying to make sure their contractual obligations were met, and were limiting the volumes offered on a spot basis. A number of suppliers attending a key base oil and lubricants event in Florida, U.S., two weeks ago mentioned that they had been approached by Asian market participants who were looking to secure spot cargoes, but availability for near-term shipments was thin.

However, as the market enters November, buying interest for spot cargoes in Asia was expected to turn lackluster as consumers tend to be more conservative in terms of purchase volumes.

Both buyers and sellers strive to work down existing inventories before the end of the year for tax purposes, and buyers therefore abstain from purchasing large quantities outside of contracted volumes, while producers sometimes reduce operating rates.

Supply and demand was generally described as balanced, although extra cargoes of the heavier viscosity grades were heard to be available in Asia. This was because requirements for the heavy-vis grades tends to decline during the cold winter months.

As a result, there has been downward pressure on these cuts in Asia, but the opposite appears to have been the case for the API Group I SN500 grade offered from the Middle East.

India imports large amounts of Group I from the Middle East, and availability of both the SN150 and SN500 cuts were heard to be limited due to recent shutdowns in Iran. The SN500 in particular was reported in tight supply, and prices were heard to have moved by at least U.S. dollars $5-10 per metric ton since last week.

While one of the Iranian producers was heard to have restarted operations a couple of weeks ago, an update about a second producer’s plant status could not be obtained, with the plant understood to have been off-line since September.

In Asia, the lighter grades continued to be reported as snug, with offers for base oils such as the Group I SN150 and Group II 150N moving up by about $10/t week on week. The price assessments portrayed below have been notionally adjusted up to reflect current buying and selling ideas, with few concluded deals reported.

Group I solvent neutral 150 was assessed between U.S. $680 and $700 per ton ex-tank Singapore, up $10/t from the previous week, while the SN500 grade was steady at $800/t-$830/t. Bright stock was unchanged at $910/t-$930/t ex-tank.

Group II 150 neutral was adjusted up by $10/t to $690/t-$710/t, and 500N was unchanged at $870/t-$890/t ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was notionally assessed up by $10/t at $570/t-$590/t. SN500 cut was stable at $700/t-$720/t, FOB Asia, while bright stock was at $740/t-$770/t, FOB Asia.

Group II 150N moved up by $10/t to $590-610/t, and the 500N/600N grades were steady at $760/t-$790/t, all FOB Asia.

In the Group III segment, 4 centiStoke and 6 cSt grades were assessed at $750/t-$770/t and the 8 cSt at $730/t-$750/t, FOB Asia, reflecting no changes from a week ago.

Aside from narrow supply, another factor that was exerting upward pressure on base oil pricing was crude oil values, which have climbed significantly in recent weeks.

On Monday, Brent prices were hovering at levels last seen in July 2015, with futures breaching the $60 per barrel mark.

Brent for December settlement, which expires on October 31, was trading at $60.89 per barrel on the London-based ICE Futures Europe exchange on Oct. 30, compared to $57.58/bbl on Oct. 23.

Crude values extended gains from the previous week as Saudi Arabian Crown Prince Mohammed bin Salman expressed support to an extension of production cuts by the OPEC and its allies beyond March, following similar signals from Russian President Vladimir Putin, Bloomberg reported.

Iraqs Kurds resumed oil exports to Turkey after a brief suspension, yet flows remained below normal levels.

In related crude oil news, U.S. crude oil exporters are shipping more cargoes to Asia as buyers take advantage of favorable price differentials and as supply curbs by the OPEC have resulted in less crude from the Gulf moving to that region, several media outlets reported. This benefits Asian refiners who will have a more diversified basket of crude oil to choose from and will also foster competition among supply sources.

Crude exports from the U.S. had been illegal until the Obama administration lifted the 40-year-old ban in December 2015.

India received its first American oil cargo of 1.6 million barrels on Oct. 2, following Prime Minister Narendra Modi’s visit to the U.S. in June, when he negotiated contracts to supply three Indian refineries with nearly 8 million barrels.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

Lubes’n’Greases shall not be liable for commercial decisions based on the contents of this report.