In the meantime, Dated Brent is trading slightly firmer, at around $111.60 per barrel. However, this crude appears to be maintaining a relatively tight range which has been in place now for some months, with no apparent significant driver to move this crude in either direction. ICE gas oil follows the crude trend and trades up at around $938 per metric ton for front month settlement, an increase of some $20 over last week.

This leaves API Group I European base oils almost exactly where they have been for the past few months, with a slight weakening emphasis for the less popular grades and a flat-lining for other grades.

Prices remain unaltered from last week, with some players hinting that things may start to change after the conference, following discussions to purchase material on a prompt basis. Levels for Group I light solvent neutrals such as SN 150 remain between $910-$930/t. Higher viscosity grades SN 500/600 are pitched from $930-$965/t, and bright stock is on offer between $1045/t and $1085/t.

These levels refer to cargo sized parcels, available from supply points within the European mainland and North Africa. Prices pertain to FOB sales or offers for Group I base oils.

Local European mainland prices for smaller parcels of Group I grades delivered by road or barge are assessed some 60-85/t higher than the export levels above. Business appears to be improving for these sales with growth returning to some sectors. Benelux and French markets seem particularly strong, and although demand is returning to Mediterranean base oil markets, commentators admit that this will be a slower process and note that demand may never quite return to the pre-crash era.

Baltic and Black Seas

Baltic supplies are again slow this week, but with an increasing number of enquiries for Russian and Belarus base oils. Levels for the two main grades SN 150 and SN 500 are still being quoted at between $845/t and $855/t, but with material in relatively short supply for larger cargoes, sellers are trying to lift numbers for forward sales, both on fixed price and index-linked basis. Target levels are $875-$890/t, but with traders driving hard counters, these levels may not be totally sustainable.

SN 900, or more accurately, heavy neutral material, is still in demand. This material can vary widely in specification and viscosity from close to SN 750, up to very high vis grades at around SN 1200. None however, is as viscous as bright stock, which remains at a premium over SN 900 from suppliers in Europe and the U.S.

SN 900, in its purest form, has been quoted at $950-$970/t on an FOB equivalent basis. This grade is often offered on an FCA level due to logistics at loading ports.

Black Sea trades are thin but with a large number of Turkish buyers attending the conference this week, demand for Russian SN 500 may start to rekindle after the event. SN 150 from Russian and Uzbek sources is still available at numbers which equate to around $915-$930/t basis CIF Gebze port. SN 500 is being offered slightly higher, at around $890-$900/tFOB, or around $945/t delivered.

Middle East

Reports from Middle East Gulf sources confirm that Group I demand may be rising in those markets, but demand is being dominated by one grade, SN 500. This material is available throughout Middle East Gulf regions with widely-ranging specifications, with recycled material from United Arab Emirates and Bahrain at one end of the spectrum and product from Yanbu, Jeddah, and local production at the other end. Iranian SN 500 plays a large part in this market with no shortage of supplies of this material available from a number of exporters in Iran.

Prices for the Iranian spec material are assessed at $905-$920/t, little changed from last report. The higher spec Group I SN 150 and SN 500 is priced at a premium of $1025-$1040/t CIF U.A.E. ports.

Again there are rumors of Iraqi base oils making reappearance, although it is difficult to attain confirmation that production has resumed presumably under the auspices of Iraqs State Organization for Marketing of Oil (SOMO). Historically, Group I grades were produced at three locations within Iraq, and suggestions are that at least one of these units has re-started production.

Africa

A number of smaller enquiries are being circulated from East African importers, many of which have strict min/ max specs attached to the provision of supply. This may be as a result of bad press which was attached to the importation of inferior base stocks into these regions which resulted in off-spec or very poor quality finished lubricants being touted around the various markets in Kenya, Tanzania and Sudan.

Imports mostly comprising of Group I SN 500 are priced relatively high as imports, and are being offered at $1070-$1135/t basis CIF in flexies, the price ultimately depending on source and quality.

South African receivers are looking at another Baltic / European cargo import rumored to be around 6,000 tons. Levels for this supply can be gauged at Baltic FOB, plus freight of around $175/t in total, giving landed numbers at around $1025/t. Ex tank, this material can sell at $1120-$1165/t after storage, import duties and handling charges are factored in.

West African receivers in Ghana are awaiting another parcel arriving under the annual contract, being supplied from west Mediterranean sources. This cargo is frequently topped off with other Group I grades from the Mediterranean, or Atlantic/Mediterranean supply points for onward sales in Nigeria.

Prices in West Africa for Nigerian imports have not significantly moved over the last few weeks, with typical Baltic and northwestern European loaded material being delivered into ports such as Apapa at $975-$1055/t, in respect of supplies of Group I solvent neutrals the top end of this range taking into account high vis grades such as SN 900. Bright stock is assessed between $1095-$1150/t depending on source and specification.

Group II/III

Group II prices within the European arena remain stable this week with most sellers resisting any inclination to start discounting these grades. The market eagerly awaits the commencement of the new supplies from Pascagoula, which may have a definite effect on already declining Group I sales within the European mainland and beyond. With a number of Group II source plants starting to appear over the next few years, which are targeting the European markets, the pressure is on to hold Group II grades at a premium, without any slippage, and at the same time compete to phase out Group I supplies or at least take part of the base oil market.

Source suppliers of Group II grades into Europe commented that what happens in one market doesnt necessarily affect strategy in another region. For example, the fact that producers in the U.S. have recently cut prices for Group II grades does not mean that European imports of the same products should be subject to the same discounting. Each market stands on its own merits and has its own rules of engagement. This applies to the Far East and Middle East, which, although under the same supply umbrella, should be regarded as separate regions.

Levels for European Group II prices are unchanged at $1015-$1065/t for ex tank sales for the light vis grades with the heavier 600N material at $1095-$1165/t.

Middle East Gulf prices of Group II base oils imports are also stable with upward pressure being brought to bear from some suppliers, but these moves are being strongly resisted by regional receivers. The intended increments of around $10-$25/t are still in the air, but little success is being made by producers to increase Group II prices over those applied during February. Some sellers have introduced restrictions on available quantities for March delivery, but this is being seen only as scaremongering by receivers and buyers who perceive that ultimately the market is going long with ample stocks of material available throughout 2014 and beyond.

Levels are left at $1025-$1065/t for low vis. material such as 150N and 220N along with heavier 500N and 600N in a range between $1090 and $1160/t.

European Group III prices are also stable to firm in light of increasing demand reported by both sellers and buyers. Most players, however, were unavailable for further comment this week, therefore prices are left intact, at least until feedback is gathered over the next few days.

Ex tank or FCA sales are being made between 915-925/t for 4 cSt grades with 6 cSt material at 920-930/t.

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.