What is perhaps obvious is that crude prices are seen to be more responsive to external geopolitical factors than production cutbacks, which ultimately failed to create any initiative for levels to rise. However, crude availability levels still remain positive, with no reports of any shortage of supplies. Common assessment of the market appears to be more about what may happen than what is happening.

Europe

Some European API Group I export prices are raised slightly this week, on the basis that there still may be further increments to filter through the system. Light solvent neutrals such as SN100 and SN150 are raised around $10/t at the lower end of the range, to $705/t-$730/t, with heavier neutrals SN500 and SN600 remaining $775/t-$795/t. Bright stock, in response to healthy demand that has extended from over the holiday period, is also lifted by $15/t across the spread to reflect offers between $875/t and $890/t.

The prices above refer to large, cargo-sized parcels of Group I base oils offered FOB ex mainland European supply points.

It is still too early to determine if local and domestic sales of Group I base oils within Europe have moved yet, since many buyers and blenders using these grades only resumed operations within the last couple of days. The resellers contacted last week have confirmed that they are certainly looking to raise FCA and delivered prices by 10/t-15/t.

The differential between local FCA prices and spot export levels is revised to 65/t-80/t, due mainly to increases on spot export offers.

Group II prices are also considered to be under review with the notification that at least one major producer has given notice of increases of around $30/t to some grades. However, at this stage, there have been no confirmed reports of price moves within European markets, hence prices remain $675/t-$695/t in respect of the light vis grades. Heavier 500N and 600N are $835/t-$855/t.

These prices refer to imported cargoes on a CIF basis landed into Antwerp-Rotterdam-Amsterdam ports. FCA or locally delivered prices from distributors are 785/t-815/t in respect of the light vis base oils, with the higher vis grades between 850/t and 885/t. Should raw material costs continue at current levels or rise further, its likely only a matter of time before these prices are addressed and increases are applied.

Group III news from European circles is limited, with most buyers of FCA or delivered supplies of these grades yet to start buying significant quantities for spring.

Distributors have reportedly applied increases to some supplies of these grades and although imported prices are $795/t-$825/t CIF in respect of 4 centiStoke and 6 cSt grades landed into northwestern Europe, local euro-based FCA sales may have risen by 10/t-20/t to 715/t-735/t FCA northwestern Europe. Group III grades carrying full European approvals on basis FCA Antwerp-Rotterdam-Amsterdam are priced slightly higher, between 800/t and 835/t in respect of 4 centiStoke and 6 cSt grades, with 8 cSt material at 775/t-790/t.

These latter prices refer to FCA or truck-delivered quantities of Group III base oils, and do not include prices for material delivered in bulk cargoes to large users of these grades, such as major blenders or additive manufacturers.

Baltic and Black Sea

Baltic reports are that prices appear to have risen in current offers for both FOB and CIF sales of Russian export barrels, perhaps as a result of higher ex-refinery gate prices. Certainly most sources in the Baltic have acknowledged that numbers will have to increase, which will ultimately have a knock-on effect for material being landed into Antwerp-Rotterdam-Amsterdam, Scandinavia and the United Kingdom.

FOB prices, heard in FOB offers or established on netted-back prices, have moved upwards by $10/t-$25/t, depending on grade and viscosity. SN150 levels are $690/t-$710/t, with SN500 between $745/t and $760/t. Prices for SN900 are now $785/t-$795/t, with bright stock of varying specifications and quality between $855/t and $880/t.

Group I activity in Black Sea regions has been slow over the past couple of weeks, although receivers in Turkey have reported that they are looking forward to the first quarter for replenishment stocks and are evaluating the various options, which include purchasing local Group I supplies as an alternative to imports, which will have to be purchased in U.S. dollars. The exchange rate is still against Turkish imports, although one source confirmed the continuation of the contracted cargoes into Derince from a Greek source. These imports are assessed at $755/t-$775/t for the light neutrals, with SN600 at $835/t-$850/t CIF.

Further large parcels are being considered for loading out of Kavkaz, Russia, although it has not been confirmed if a new ship-to-ship (STS) facility is yet in place, or if these parcels will have to be loaded ex Novo or another suitable port.

There have been no confirmed cargoes of Group III base oils yet for 2018, but according to local Turkish sources, these will again be part of the import program for blenders during 2018.

Middle East Gulf

Final news is not yet available on the offers for U.S. Gulf Group I material to be delivered into receivers in the United Arab Emirates, but sources have confirmed that with one major offer open until this week, no decision has yet been taken on the purchase of this material.

Prices are still being negotiated, apparently, with no final numbers being released. Sources noted that there appears to be a conflict between FOB prices which are rising in response to higher crude levels, and the local prices -which have so far only seen minimal input from Iranian producers after continuing civil unrest there.

Prices for the U.S. Gulf heavier neutrals offered are believed to be in the region of $800/t CIF Middle East Gulf. Emirati buyers are also concerned that there may be problems in the future for material coming out of Iran, and with this uncertainty, option for imports from outside the region may be an answer.

Iranian SN500 is still available, since movement to storage in southern Iran would have taken place some time ago, at least prior to the latest insurgence. Prices appear to have moved $5/t-$10/t upwards, taking indication FOB levels to $800/t-$810/t.

Group III base oil exports maintain their profile from Middle East Gulf sources, with a number of cargoes identified loading out of Al Ruwais for the west coast of India, the Far East, the U.S. and Europe. Recent information suggested that a number of cargoes from Al Ruwais are being sold on an FOB basis to third parties. This has not been confirmed yet, since these cargoes would be moving into regions which are currently under the auspices of appointed distributors, suggesting that this practice could create conflict in local markets, where reselling of Group III base oils is part of custom and practice.

Netback FOB prices are adjusted upwards this week, since after a period of consolidation, sellers are trying to push levels higher with every opportunity. Feedstocks in the Middle East Gulf will have risen in line with crude and gas prices and now Group III grades ex Al Ruwais are assessed at $755/t-$775/t FOB for the 4 centiStoke and 6 cSt grades.

Neste-approved base oils out of the Bahrain facility on the same basis will now netback some $65/t-$90/t higher, yielding a relatively higher contribution level. Qatar-sourced base oils made from gas-to-liquids production remains earmarked for in-house use, and prices on an FOB assessment are not available.

As of yesterday, there had still been no official news regarding the streaming of Group II grades out of Luberefs Yanbu facility in Saudi Arabia.

Receivers of Group II have reopened negotiations with Far East suppliers, suggesting that they are in a position of having to cover supplies which otherwise may have come out of Yanbu. Prices in respect of the lighter grades appear to have been raised a few dollars, perhaps reflecting demand. The prices heard in offers last week are still not confirmed, but with completed trades at around $732/t in respect of 100N, and $893/t CIF Middle East Gulf for 600N, levels for local U.A.E. sales of Group II base oils on FCA or delivered basis are assessed at $840/t-$865/t in respect of the grades 100N/150N/ 220N, with 500N/600N remaining $955/t-$985/t.

Africa

Enquiries from traders in East Africa and South Africa for quantities of Group I base oils in flexies have produced very few offers at this stage. Regular suppliers in the Baltic and the Mediterranean have declined to offer these supplies, stating that they have become cumbersome and costly. Even the request for higher prices drew little enthusiasm from suppliers. Buyers are awaiting offers from traders in India and the U.A.E.

West African trade is quiet, particularly in Nigeria, where no trades have been announced during the past week. The cargo for Guinea and Cote dIvoire is reported to have been fixed ex Mediterranean, although no shipping information has come to light as yet.

Nigerian receivers have announced that either themselves, or traders on their behalf, are trying to source another large parcel of Group I base oils out of sources in the U.S. Gulf. They are also reported to be looking at an option to load quantities of light vis Group II material, which may be used by the same parties responsible for the large import of Group III grades last year.

Also, two enquiries have been issued to Baltic suppliers for January parcels to be loaded at undetermined prices.

Prices have to be readjusted upwards, irrespective of source, whether Baltic, U.S. Gulf, or Mediterranean, with indications across the board yielding numbers of $835/t-$855/t in respect of SN150, and possibly 150N, and between $875/t-$895/t for SN500 and $995/t-$1025/t for bright stock. Mediterranean-sourced bright stock will be proportionately higher due to quality, and is indicated at $1020/t-$1045/t for products with a minimum viscosity index of 95.

Russian SN900 is indicated at $955/t, based on the latest offers of this material CIF/CFR Apapa.

The prices above refer to quantities of Group I base oils delivered CIF/CFR Apapa, Lagos, in minimum parcel sizes of 5,000 tons.

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