Crude has dropped some $2 per barrel, taking Dated Brent to around $108.50. ICE gas oil appears to have lost momentum, retracting to around $886 per metric ton in late Tuesday trading.

API Group I FOB price levels within mainland Europe have stabilized around levels presented last week, with some sellers who are trying to move material out of tank making adjustments mainly around the mean levels of the spreads, with the lowest parameters remaining unaffected. Light solvent neutrals are maintained at $1035-$1065/t, with heavy neutrals at $1035-$1065/t. Bright stock appears to be in demand in particular export markets and as such has at least maintained last week’s levels, possibly upping by $5-$10/t in certain cases, to $1250-$1265/t.

Prices above pertain to offers and sales of bulk cargoes of Group I base oils being sold or offered ex mainstream suppliers within Europe and Mediterranean Africa.

Local and domestic European prices have not really moved, perhaps flat-lining at least until September, unless theres a dramatic turn of events.

Deliveries by truck and barge are 90-120/t higher than exports, reflecting the additional costs of handling, storage and delivery of smaller parcels of Group I stocks.

European Group II markets appear stable, although there have been reports of possible increases as a result of some United States producers’ source prices increasing. Sellers representing Far East producers may face a different agenda, with Group II now widely available in their local markets and an imminent potential oversupply.

Prices remain as per last week, with light vis grades from 70N through to 220N priced between $1085/t and $1125/t, along with 500N and 600N between $1195/t and $1285/t, all basis ex tank sales from storage throughout Antwerp-Rotterdam-Amsterdam-Gent.

Group III prices appear firm, with many sellers saying demand is healthy and some experiencing a sellout of all available grades, most of which are imports produced outside Europe. This is an about-turn from some months ago when a precarious oversupply of Group III was forecasted for parts of Middle East Gulf and Europe. With buyers accepting prices, this trade looks set to grow alongside new barrels coming online. Levels are maintained at 955-960/t for 4 cSt grades and 965-975/t for 6 cSt grades, all basis ex tank sales.

Baltic and Black Seas

Baltic avails of Russian and Belarus Group I are reportedly good, and with an increase of material in the region, a great deal of pressure is being lifted from European supply. Prices for offers for June sales are in line with expectations, and will compete with mainland stocks as a second line of supply. Prices are assessed at $990-$1010/t for SN 150 and lower quality SN 500. SN 500 grades with comparable European mainstream specs are being offered at $1025-$1040/t, all on an FOB basis with no new FCA or DAF levels being advised.

Heavier versions of the SN 900 grade are between $1065/t and $1135/t depending on quality and ultimate specification. There have been offers made for a number of parcels of SN 900 — some ex Baltic and others ex Antwerp-Rotterdam-Amsterdam.

Black Sea trade has been thin this week with few reports of finalized business other than a smattering of small parcels delivered into Turkish ports ex Uzbekistan. Bulgarian traders are in the market for quantities of Group I, reportedly seeking higher quality material, possibly covered by Greek suppliers.

Prices within the Black Sea for local supplies have remained steady with the range of Uzbek light grades offered at around $985/t basis CIF Gebze, with heavier grades such as I-50A at around $1010/t. There are no reported sales of Turkmeni-sourced supplies this week.

Middle East

Middle East Gulf regions appear to be facing shortages of some Group I grades such as SN 150 and bright stock, and amid reports of bright stock moving into areas such as Saudi Arabia, regular shipments from U.S. producers may not be reaching United Arab Emirates receivers and traders. Offers of European bright stock have been made, but price targets are too low to allow the arbitrage to function even between the Mediterranean and U.A.E. Expectations on delivered numbers are some $50-$75/t adrift from the reality of shipping bright stock from northwestern Europe or the Mediterranean. However, this may narrow from both ends if stocks continue to build in Europe and this grade becomes really tight in the Middle East Gulf.

SN 150 also appears to be in short supply with a number of buyers seeking it. It is being postulated that Iranian SN 500 is still available in large quantities but perhaps not so for SN 150, forcing Middle East Gulf receivers to consider looking outside the region for supplies.

Prices are always difficult to report from this region with Iranian SN 500 being bought in local currencies by an array of traders, many of whom claim not to have any connections with Iran. Levels for re-exports ex U.A.E. at around $1020-$1030/t basis FOB are possibly the best guide to Iranian FOB numbers, which are probably $25-$30/t lower than the U.A.E. re-exports. Prices for imported and locally produced Group I are $1075-$1095/t delivered CIF for solvent neutrals, with bright stock from sources in Indonesia, Thailand and U.S. landing at around $1190/t CIF/CFR.

There have been no further reports or comments this week regarding the startup of Group II operation at Al Ruwais, near Abu Dhabi, indicating it may be some time before a satisfactory plan is executed. This unexpected delay has cheered incumbent Group II suppliers to this region and has granted some respite to what may still result in an oversupply for Group III, with a potential further 500,000 tons of Group III grades emanating from this new unit.

Prices for Group II imports are flat. Some suppliers are still trying in vain to move prices higher, but with supply options aplenty in respect of these grades, it is tough for sellers to call the tune. The result, at least for June cargoes, appears to be that buyers have won the status quo and levels will remain at $1085-$1120/t in respect of the range of light vis grades and $1110-$1145/t for 500N and 600N, basis CIF/CFR Middle East Gulf ports.

Africa

South African sources report that another import of Group I SN 500 has been talked about for Durban during August. With European and Baltic prices on the cusp, there may be slight delays to this, but agents in the port confirm that around 5,000 tons is being earmarked for this cargo. Landed price is expected to be around $1100/t.

There have also been new enquiries for Group II being delivered into South Africa and it is believed through local sources that these could be used for manufacturing transformer oils. Indian companies are known to be looking at satellite production of these grades in areas such as South Africa, and this may be one of these ventures.

There is growing demand in South Africa for Group II and Group III base stocks to be used in the production of a new generation of finished automotive lubricants. These supplies are being organized in flexies and in bulk from sources in the U.S and Far East.

West Africa is once again plunged into a dilemma, with some receivers and buyers in Nigeria considering that the European base oil market is about to fall, with prices decreasing over the next few months. Gaining acceptance for offers at this moment is becoming extremely difficult for traders and suppliers trying to sell at current prices.

Prices are under discussion, and unless an offer is made to an importer who cannot exist without stocks, delays to deals are growing. Levels offered at the moment are reportedly $1085-$1120/t in respect of European or Baltic solvent neutrals, with bright stock ex U.S. being offered at $1275/t, whilst bright stock out of European suppliers is higher, at around $1300/t.

A variety of SN 900 grades with various specifications is being offered to Nigerian receivers at $1085-$1195/t, a wide spread depending on quality.

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.