After a slight plateau, Dated Brent dipped to around $66.75 per barrel. West Texas Intermediate is trading at around $63.80 per barrel. ICE gas oil front month numbers are currently $604 per metric ton.

API Group I FOB prices within mainland Europe are continually lower, with light solvent neutrals offered at $735-$765/t and heavy SN 500 still at $720-$745/t. With almost every offer comes a counter -of up to $50/t lower, sometimes from those considered non-serious buyers. With forward buying a thing of the past, producers are vainly trying to create a year-end-type market.

Bright stock is the anomaly, thanks to relatively high demand and traders trying to ship it to markets such as West Africa, Middle East Gulf and sometimes Far East. Prices remained relatively stable, with a couple of suppliers even trying to move prices upward, knowing that certain traders are in a box regarding sourcing reasonable parcels of bright stock from the right shipping location. Offers are $975-$1025/t, with the high end representing one supplier holding what it referred to as an ace hand.

Offers above refer to export parcels ex mainstream producers located in mainland Europe and North Africa.

Local European markets have all but disappeared, with blenders running down stocks for year-end, ignoring any opportunities to purchase at December lows, since most believe theres a way to go before bottoming out. Suppliers are trying to tempt buyers to take stocks out of tank prior to end-December, but with very little success. Even large blending operations are buying quantities daily, not wishing to commit to unstable levels.

One local buyer confidently said they agreed to purchase 2,000 tons of Group I solvent neutrals at $72/t lower than last week’s levels for export sales. This would equate to around $700/t for both grades. These types of deals appear to be haunting the market, tempting some buyers.

Group II prices have fallen dramatically across Europe, with some importers stating that they would not be taking cargoes into European hubs due to slow sales and declining prices requested by buyers. Source discounts are being announced almost weekly by U.S. and Far East producers, and although these cuts are designed for those regions local markets, the scale of price changes is not lost on receivers and buyers in Europe.

Prices have dropped, with light vis grades from premier suppliers around $825-$855/t, along with heavier grades such as 500N and 600N around $835-$865/t. The second division of suppliers’ prices are more on par with Group I levels, at $765-$795/t and $775-$810/t, respectively, for light and heavy vis grades. Prices for higher vis grades of Group II base oils do not appear to have dipped below lighter vis prices, as has been the case with Group I.

Finally, Group III prices have started to change significantly, perhaps due to increased production starting to really impinge on European markets. Prices for 4 cSt and 6 cSt have fallen by an average of 25-35/t depending on region and which supplier’s prices are observed. Levels are now 790-820/t, basis ex tank sales.

Baltic & Black Sea

Baltic trade for Russian and Belarus exports has been very slow, as has been European trade of Baltic avails. To offset this potential problem, sellers are trying to convince receivers that even if they pay higher today than next week, it will reflect on future purchases, which may be even lower.

Distributors in the Baltic are offering SN 500 at $710-$725/t basis FCA, along with SN 150 at around $755/t. FOB levels are $15-$45/t higher, depending on loading point.

Crimea avails have reappeared, with a 5,000-ton parcel of SN 500 being offered for sales this week. The recurring difficulty appears to apply to this parcel, since buyers expect prices to fall and are reticent to commit to a quantity that can only really go to a deep-sea location. Prices are attractive and may meet arbitrage expectations in Middle East Gulf, but there still remains the nagging doubt that prices will fall further. At around $690/t basis FOB, the supposed level has even provoked interest from Turkish buyers.

One rumor is that South African receivers may be looking at the cargo, with the assistance of a prominent trader.

Turkish buying has lately been centered on taking Mediterranean material, with a number of Group I parcels being split among two or more receivers, keeping quantities to a minimum for individual companies whilst still enabling continued operations.

Prices are $785-$795/t in respect of SN 500, with bright stock holding at $1045-$1060/t, all basis CIF.

Middle East

Middle East Gulf business may be slowing, possibly reflecting the time of year and the reluctance of Far East sellers to push the limits on imports to the region. One receiver in Qatar has apparently deferred purchasing a large Group II parcel, citing the usual reason: lower prices possibly forthcoming.

Group I demand is relatively healthy in the Middle East Gulf, compared to Europe and Africa, with a steady stream from various origins flowing through the United Arab Emirates. There is definite demand for large quantities of bright stock, with more than four receivers looking for suitable cargoes. Sources can be U.S., Brazil, Europe or Far East locations such as Indonesia. But with demand only increasing for this grade, its shorter in many regions.

Other Group I prices have followed other markets downward, with the occasional Iranian availability of SN 500 being bought locally now at a dollar equivalent FOB price of $725-$740/t. Other imported Group I grades are $25-$30/t higher, but with Group II prices now openly competing with solvent neutrals, the drift is away from Group I neutrals, to Group II, but with bright stock very much in demand.

The Black Sea export may work into this region, offered to a number of receivers at around $750/t. At just under $700 FOB, this price is tight with added freight for 5,000 tons.

Group II imports have receded. There are plans for January deliveries into the region with a number of suppliers keeping their cards close to their chest on prices, perhaps in the belief that the market will turn around over New Years and demand may provide a platform for prices to stabilize.

The Takreer plant at Al Ruwais will play an important part in the supply scene next year, and perhaps with this in mind, Far East producers may concentrate on markets closer to home for adequate contribution levels for Group II grades.

Offers are $820-$835/t for the range of light grades and for 500N and 600N.

Africa

South Africa importers are assessing the possibility for both Baltic and Black Sea bulk cargoes arriving into Durban around late January. With recent imports in flexies, this region is utilizing the opportunities to lift from various sources other than U.A.E. With shipping times not dissimilar to those from U.A.E., and prices more attractive, the only downside is falling prices.

Prices are $925/t CIF East African and South African ports in respect of SN 500 in containers.

Receivers in West Africa, other than for contracted supplies, are declining offers unless they are being made for future heavily discounted cargoes.

The base oil market may not be so uncertain. With feedstock and crude levels still falling, the substance for forecasts would appear to be sound in that base oils, coupled with the delay factor, still have a way to go. The real problem may be laying hands on sufficient quantities, with producers in Europe and Russian exporters cutting back on stocks.

Some Nigerian buyers have opted to take parcels in containers, which although slightly higher in price than bulk supplies, are still competitive, given the low FOB numbers and container freight. They have opted for these purchases as an interim measure to protect against stock-out situations, and to maintain import license mandates.

Prices for SN 500 in flexies are established at around $895/t, with bright stock landing at around $1025/t.

Further offers for large cargoes of bright stock with top-off quantities of SN 500 are being made this week with traders considering sources in U.S. and Europe. Levels of $1008-$1055/t are expected for bright stock in bulk, with bulk SN 500 at around $870/t, all basis either CIF or CFR.

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