dated deliveries of Brent crude has retreated from the $80 per barrel high of less than two weeks ago and posted yesterday at $75.50/barrel in London for July front month settlement. West Texas Intermediate has likewise fallen to $66.65/barrel, down some $5/barrel from last week, also for July front month. ICE LS gas oil posted at $673 per metric ton, in line with the past two week, still for June front month.

Europe

European API Group I export prices remain firm although the pace of markups has slowed. Some traders and other buyers said there are special deals to be done for prompt sale and loading dates, which may confuse the overall picture.

Light solvent neutral prices remain between $880/t and $905/t, while heavier solvent neutrals are also relatively static at $935/t-$965/t. Bright stock prices may have weakened a little to $985/t-$1,000/t, taking account of a couple of recent deals for large quantities of this grade. Most bright stock sellers are still advocating prices above this level but are finding few takers.

The above levels pertain to large cargo-sized parcels of Group I available on an FOB basis from mainland European supply points.

Prices for Group I sales within mainland Europe appear to have reached their zenith, as pressure is coming off for further hikes to be applied from June 1. Values are still at their highest for some time however, and there are few signs that they would fall. Supply and demand appear to be in balance contrary to couple weeks ago. Buyers are denying that they are having to pay more after the month-end and are resisting further increases.

The differential between export and local sales prices is unchanged at 30/t-80/t, export prices being lower.

Group II prices similarly appear to have found their levels and are steady this week. With the heat being taken out of further raw material cost increases, at least at the moment. FCA prices remain as last reported: $985/t-$1,025/t (840/t-876) for light neutrals and $1,065/t-$1,090/t (910/t-930) for heavy-viscosity grades.

Group III prices are being adjusted by most suppliers as of June 1. Demand is reportedly positive as more lubricant blenders continue to incorporate Group III base oils. Arguments are raging between suppliers with full slates of finished lube approvals and those with partial slates. Some newer suppliers from the latter camp contend that approvals do not warrant a premium when quality levels are equitable.

Availability of 6 centiStoke oils has shortened due to higher demand for this grade. This has resulted in a price differential of around 20/t being established between 4 and 6 cSt oils, whereas previously these two grades were priced together.

From June 1 FCA sales in euros are now moving to between 765/t-780/t for 4 cSt grades with partial slates of approvals, 785/t-800/t for 6 cSt and 785/t-790/t for 8 cSt. Group III oils carrying full slates of ACEA and European OEM approvals are assessed at 800/t-825/t for 4 cSt, 820/t-845/t for 6 cSt and 825/t-850/t for 8 cSt, FCA Antwerp-Rotterdam-Amsterdam.

The latter prices are for ex-rack or truck-delivered smaller lots of Group III and do not reflect material delivered in bulk cargoes to large users such as major blenders or additive manufacturers.

Baltic and Black Seas

Prices ex Baltic had almost reached parity with FOB levels for mainland Europe but now appear to have flattened out and established a differential once again. A few local cargoes were announced this week into Northwestern Europe but there remains a lack of large, deep-sea inquiries for receivers in West Africa. Sources located in the Baltic suggested that Nigerian receivers balked at offered prices, claiming they were uncompetitive against imports from the U.S. Gulf Coast.

Prices remain firm, but some Baltic sellers said they are willing to negotiate on both delivered and FOB prices currently on offer to regular buyers in Northwestern Europe and the United Kingdom. FOB levels for Russian SN150 remains $850/t-$870/t, SN500 is $920/t-$945/t, SN900 is $955/t-$980/t, and bright stock is $920/t-$1,045/t, depending on source and loadport.

Black Sea sources report few cargo movements this week, either crossing the Black Sea into Turkish ports or Mediterranean cargoes. Large parcels selling on an STS basis from Kavkaz, Russia, have remained quiet, although sources said that material is being prepared with a view toward loading either one very large cargo during the first few days of June or splitting availabilities into two cargoes. One of these is reckoned to be destined to Far East, while another may load for Rotterdam.

Inquiries for Mediterranean cargoes into Gebze and Derince, Turkey, are open, although offers for a Group I cargo loading out of Northwestern Europe are being considered for Gebze. Offered prices for Mediterranean Group I cargoes are heard around $935/t-$965/t for light solvent neutrals and $975/t-$995/t for SN500 and SN600, basis CIF. Fully approved Group III base stocks ex Mediterranean in bulk are now assessed to be under offer into Gebze at around $900/t-$925/t CIF, or the equivalent in euros.

Middle East Gulf

Middle East Gulf imports are dull this week, with few notifications of any major movements of Group I or Group II cargoes making their way into Middle East Gulf receivers. Iranian export cargoes have again disappeared off the radar, and no new parcels are being shipped out of Bandar Bushehr or Bandar-e Emam Khomeyni. It is worth noting that large Group I cargoes are being arranged for import into India, a market that in the past has become synonymous with Iranian exports.

The adoption of this alternative supply source could be a precursor or insurance against possible U.S. sanctions against Iran.

Large parcels of Group III are being exported from Al Ruwais to the West Coast of India, with one 9,000-ton cargo having loaded last week.

Actual or notional FOB rates are maintained this week at $795/t-$820/t on an FOB basis for both 4 and 6 cSt grades with partial approvals from Al Ruwais, United Arab Emirates. The same economics are deemed to apply to material being shipped by Bapco from the refinery in Sitra, Bahrain. Neste-branded base oils from Sitra carry more extensive approvals and are priced at $835/t-$865/t for the same grades. FOB levels are established on a netback basis using published shipping freight rates and taking into account advised CIF prices from a variety of sources.

As with Group I imports into Middle East Gulf regions, there is scant news on Group II supplies ex Yanbu, Saudi Arabia, but a number of U.A.E. sources have made comments that bode well for this supply, suggesting many blenders looking to take large bulk parcels, almost as a cooperative, to gain economies of scale. How this trade will be handled is being worked on right now, and the results are expected to be seen during July and thereafter.

It is not clear if resellers will be allowed to handle these supplies since they would compete with established Middle East Gulf suppliers of Group II originally sourced out of U.S. These supplies can be made available ex U.A.E. on an FCA, truck- or tote-delivered basis and at the moment are priced at $1,025/t-$1,060/t for light grades and $1,120/t-$1,170/t for SN500 and SN600.

Africa

South African reports include news of another large parcel moving south from the Mediterranean for discharge into Durban during July. The cargo of some 8,000 tons of Group I grades will be used to supplement the already well established trade within South Africa.

Apart from the impending arrival of a cargo going into Tema, Ghana, and a U.S. Gulf Coast parcel moving into Apapa, Nigeria, during first half June, West African markets are quiet. Sources suggested this week that some buyers who were importing large cargoes of base oils and then distributing within the interior of Nigeria, have moved away from this trade because local markets cannot sustain current prices. FOB prices in Europe and in the U.S. rose some 20 to 25 percent over the past few months. Major oil companies that import regularly have not been affected in the same way, or at least do not have the luxury of being able to pull out of spot markets.

There are also reports that the Nigerian government welcomed this turn of events and plan to use it to weed out unlicensed, rogue blending operations that produce sub-standard finished lubricants.

The large U.S. Gulf Coast Group II parcel loading in early June for receivers in Apapa is still in the cards, and with the quantity rumored to be in excess of 16,000 tons, this transaction will be of interest when and if it is finally announced.

Prices for Group I base oils landing into Nigeria are unchanged this week at $940/t-$955/t for light-viscosity grades and $995/t-$1,000/t for heavies. Bright stock ex U.S. Gulf Coast is advised by representatives of receivers to be between $1,035/t-$1,060/t. These quotes refer to large parcels of Group I delivered into Apapa port.

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