Dated Brent also shows signs of potential weakness with values falling below $106 per barrel in front month trading Tuesday afternoon. ICE gas oil echoes this trend with prices below $900 per metric ton for the first time in months. Gas oil is showing at $896/t for front month settlement. Both these markers are chasing lower levels, which ultimately will have an effect on other petroleum product prices.

API Group I base oil prices within Europe are unchanged with light viscosity grades such as SN 150 remaining between $910 and $930/t, but when including Group I light vis grades, which are being used as substitutes for some decommissioned Group I low vis production, the spread can be pushed to around $1065/t.

Medium vis heavier Group I grades are $930-$965/t, slightly lower on the highs of this range, with bright stock between $1045-$1075/t.

Local European pricing remains competitive with a large number of sellers looking to move material in northwestern Europe and the Mediterranean. There are some reports that Iberian business has started to pick up, but at the same time disappointing market news from Italy and Greece are clouding the European revival. Some players say that it will take another month or so before Mediterranean markets show a turnaround, with economy subdued in many locations.

Differentials between local and export prices have been whittled down to 40-65/t higher for domestic sales of Group I grades.

Baltic and Black Seas

Baltic sellers are still trying to push prices for the two main grades back up to acceptable levels. But as soon as two or more offers are received at close to $900, another seller will cut these levels by some $25-$40/t to obtain sales on a prompt basis.

This has led to spreads of $845-$895/t being touted for the two main grades SN 150 and SN 500. The heavier grades are more popular with traders trying to move cargoes out of West Africa, with quantities of SN 500 being offered at close to $900/t, but being purchased at $865-$875/t.

SN 900 remains scarce in large quantities with only one seller offering it on an FCA basis at levels which would equate to FOB $955-$960/t. This is being negotiated down by more than one trader, where ultimately buyers are hoping to book this material around $930/t.

Black Sea trade remains thin with only one notable enquiry from Turkish buyers for a parcel of 3,000 tons of SN 150 for prompt delivery. Other Black Sea cross trade has been lacking the normal level of enquiries from Turkish buyers due to economic problems. Prices for Russian SN 150 and SN 500 have been maintained slightly ahead of Baltic levels, with SN 150 and SN 500 being offered at $875-$890/t basis FOB, and with sea freight of around $35-$50/t, delivered prices are $935-$950/t basis Gebze for these two Russian grades.

Uzbek SN 150 may be offered at a small discount to these levels at around $920/t delivered CIF.

Middle East

The Maghreb and the Levant regions remain relatively quiet, with Egypt looking to import further quantities of bright stock under tender, but with the problems of trading in this area still remaining, the incumbent suppliers may possibly remain in situ. Moroccan sellers have signaled avails of Group I SN 150, SN 300, SN 500 and bright stock, but whether these grades come on the general market or are included in tender remains to be seen. Price indications for these grades appear to be aligned with local or domestic markets in North Africa and do not lend themselves for export sales.

Middle East Gulf Group I demand remains healthy with a number of buyers looking for quantities of high vis grades such as SN 700 or even higher, with one party looking for SN 850 and SN 1200. These grades may not be simple to procure with only some Uzbek production of industrial grades of base oils perhaps meeting these spec requirements.

Iranian producers are once again showing material for export from southern Middle East Gulf ports, with prices remaining $900-$920/t in respect of quantities of SN 500. SN 150 and SN 650 are also available with prices for the former grade slightly above SN 500 levels, with SN 650 being offered at $885/t FOB. Local traders have purchased a number of cargoes from Iran, with SN 500 being almost the universal Group I lower-spec grade in use within this region.

Imports of other Group I base stocks from Saudi Arabia along with other United Arab Emirates-produced material still maintain the quality end of the market with prices pitched higher at $990-$1040/t for the range of solvent neutrals.

Exports of Iranian SN 500 are being pushed from traders in U.A.E., with receivers in East Africa and South Africa taking a number of parcels of this material in flexies shipped in containers. Indian receivers are declining the Iranian exports at this time, claiming that they can buy better quality material at more attractive prices both locally and from other sources.

Supplies of bulk SN 500 are being sourced for import into South Africa from northwestern Europe and the Baltic, with the rumor of another 5,000-6,000 ton parcel being procured for arrival during March. After importation and distribution costs are deducted, this trade forms an attractive alternative to locally produced Group I products.

Africa

West African receivers are again looking for cargoes arriving during March and April. Having broadened buying horizons to the U.S. and Brazil, Nigerian importers are now looking for Group I heavy neutrals and bright stock in large quantities. One cargo from the Mediterranean destined primarily for Ghana is also being considered for Nigerian buyers, who are independently looking to take Baltic supplies at the same time as higher-spec material from northwestern Europe and the Mediterranean.

Prices for Group I imports into Nigeria have not varied too much over the last couple of months, with all potential supplies having to meet the lowest common prices being paid. Thus Group I parcels from U.S. will only be considered if on par with the lowest-priced Baltic supplies.

Offers are at last weeks levels, $940-$1020/t for Group I high vis solvent neutral grades with bright stock on offer at $1095-$1130/t. SN 900 ex Baltic has been heard at around $1000/t basis CFR for a parcel of around 4,000 tons, but the quantity and the final price for this parcel have yet to be confirmed. The level of around $1000 is extremely low for import of this grade into Nigeria, and may represent a one-time deal from Baltic suppliers needing to promptly move this parcel.

Group II/III

Group II European imports are pressured by low Group I prices and widespread discounting by manyU.S.production sources over the last few weeks. Interestingly, Far East suppliers have been trying to push these grades upwards, but with little success in European markets.

Levels for Group II grades within Europe are assessed between $1015-$1035/t in respect of light vis grades such as 150N, with heavier viscosity material prices between $1095-$1165/t.

Middle East Group II grades are in the grip of suppliers who are adamant that prices should rise at least $5-$10/t, but are also subject to receivers looking to take increasing quantities in the future. With a booming automotive sector in the Middle East Gulf regions, more and more Group II grades will be used. This has led to importers looking for lower prices and also supplies from other sources such as the U.S.

Levels are $1025-$1065/t for lower viscosity products with the heavier 500N and 600N between $1085-$1145/t.

The European market for Group III remains relatively static this week following January reports of demand improving and increasing sales of the main grades. Sales of Group III base oils are, however, moving in the right direction, with some importers looking to bolster the number of storage facilities serving both the Mediterranean and northwest European markets. Additional supply points are being located to serve southern European markets, also enabling importers to target North African blenders, where demand for Group III products may grow in the next few years.

Within the European mainland, prices remain unchanged at 915-925/tin respect of 4 cSt grades along with 6 cSt sold at 920-930/t, all basis ex tank.

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