Dated deliveries of Brent crude remain around the $60 per barrel mark, registering yesterday at $60.01 per barrel for February front month. West Texas Intermediate crude has almost established a $10 crack against dated Brent, posting at $50.50 per barrel but for January front month. ICE LS gas oil weakened the past few days, and now shows at $553 per metric ton, almost $20 lower than last weeks snapshot.

Prices are established from late ICE London trading on Monday.

Europe

Throughout Europe, sellers are offering substantial discounts to move API Group I out of storage for export sales. Most traders and traditional outlets have been approached by sellers trying to shift stock prior to year-end. Prices for light solvent neutrals dipped to between $595 per ton and $620/t, while SN500 and SN600 were offered at $610/t-$625/t. Bright stock prices remain $800/t-$840/t since there is still demand for this grade. There are rumors, however, of much lower prices extended as specials for loyal buyers.

There have also been reports of some trading companies taking positions by purchasing material and storing the same in tank, presumably to be able to sell at better margins in the new year. Some are trying to hedge quantities by contracting forward sales to be delivered during the first quarter.

The above price levels refer to large cargo-sized parcels of Group I sold on an FOB basis ex mainland European supply points, always subject to availability.

Prices for Group I sold within Europe have drifted lower with sellers trying almost anything to move quantities of these grades before the end of December. Sellers who declared they would not discount further to move barrels out of tank, have been now offered ever lower numbers in response to a lack of buying activity.

The differential between local prices and export numbers is maintained this week, with both domestic prices and exports moving lower by a relatively similar amounts. The domestic premium is assessed between 65/t-95/t higher than export levels.

Group II prices are assessed stable, but with a growing differential between Group I and Group II prices, sellers are having to deflect questions about what some consider to be high values. Sellers report steady demand and positive market expectations for next year, but there is a nagging doubt about whether current levels can be sustained. With prices coming under pressure in source markets in the U.S. and Far East, and with a new Group II plant due to open in Rotterdam, players are suggesting that prices should be re-examined.

FCA and truck- or barge-delivered levels for the light-viscosity grades are $885/t-$930/t (775/t-815), and the heavier-vis cuts are $960/t-$1,000/t (840/t-875).

Prices for Group III oils with partial slates of finished lubricant approvalsgrades are competitive against Group II numbers, which is tempting some blenders. Four cSt oils are 740/t-760/t, 6 cSt grades are 760/t-780/t, and 8 cSt are 780/t-800/t, all on an FCA basis. Group III oils with full slates of ACEA and European OEM approvals are maintained at 860/t-880/t for 4 cSt, 885/t-910/t for 6 cSt and 855/t-885/t for 8 cSt, all FCA Antwerp-Rotterdam-Amsterdam.

The prices above do not apply to material delivered in bulk cargoes to large or major buyers, which may be lower.

Baltic and Black Seas

The Baltic region has finally yielded up a 10,000-ton cargo for Nigeria, a deal that apparently was three months or so in discussion. Contract barrels have been delivered into Antwerp-Rotterdam-Amsterdam loaded out of the Baltic.

Prices appear weaker for contract and spot quantities loading during the past few days: $580/t-$599/t for SN150 and $585/t-$600/t for SN500, basis FOB. Bright stock ex southern Baltic remains between $795/t-$820/t.

Black Sea reports suggest limited trading despite a number of Mediterranean sellers touting deliveries of Group I cargoes to Turkish receivers. This activity does not appear to be attracting any real interest, with Turkish buyers resolutely remaining loyal to their local production, where prices have been slashed to encourage offtake. Offers for European Mediterranean Group I base oils continue, with some receivers starting to become interested in the very low numbers.

Prices have been so attractive that other traders have made inquiries for the same product to be loaded for other markets in Europe, the Caribbean and South America, but suppliers have mainly rejected these proposals commenting that the prices only apply to deliveries into Turkey or other Black Sea receivers.

Prices heard in offers from Mediterranean sources are between $605/t-$620/t for quantities of SN150 and $610/t-$625/t for SN500 and SN600. Bright stock prices are steady, offered ex Spain or Italy at $845/t-$870/t.

Middle East Gulf

Future Red Sea cargoes are to load out of Yanbual Bahr and Jeddah, Saudi Arabia, for receivers in India and the United Arab Emirates, but no further news has emanated regarding the cargo proposed to load at Jeddah and discharge in the Baltic.

Middle East Gulf receivers are expecting to take large quantities of Group I base oils offered at very competitive prices by European traders and producers. Some reports describe landed numbers lower than any comparable material from Iran, and with quality comparable to material from Saudi Arabia, the attraction is obvious. These parcels will arrive into the U.A.E. during January, ideally being out of inventory at December 31.

U.S. sanctions appear to be affecting base oil exports, perhaps not from a logistical stance, but receivers in the U.A.E. and on the West Coast of India are showing reticence to take material from Iran due to the possible repercussions from U.S. authorities.

Group III exports producing notional FOB levels are adjusted slightly higher this week due to reports of higher selling prices in local markets both inside and outside Middle East Gulf. Those values are raised to $825/t-$860/t for 4, 6 and 8 cSt oils with partial slates of finished lubricant approvals sold from Al Ruwais, U.A.E., and Sitra, Bahrain.

Material carrying full European approvals marketed by Neste from Sitra is pushed further upwards due to higher selling prices for these grades in Europe. FOB levels are $915/t-$945/t for all three grades for material moving to European, U.S. and other Western markets. Eight cSt moving eastwards will show lower netback results due to selling prices in those markets being around $100 less.

The FOB prices refer to notional levels established on a netback basis using published freight rates, taking account of local selling prices, plus notifications of bulk CIF/CFR cargo prices from various sources.

Group II supplies ex Yanbu are confirmed into Middle East Gulf, but some receivers said they have maximized storage for attractively priced Group I grades and have postponed Group II purchases. Prices for fully approved products ex hub storage U.A.E. on an FCA basis or delivered by truck or flexitanks, are estimated between $1,085/t-$1,030/t for 100N, 150N and 220N and $1,155/t-$1,195/t for 500N and 600N.

These prices refer to Middle East Gulf delivered quantities of less than 25,000 tons per load, but often with a total quantity of up to 300 to 500 tons per offtake. Prices may vary with destination and distance from hub supplies.

Africa

North African receivers and Mediterranean suppliers appear to be working in tandem to supply parcels into Morocco, Tunisia, Libya, Algeria and Egypt – these being mostly Group I but with in some cases also including Group III. The supply of bright stock to EGPC in Egypt will be announced later this week and is expected to be awarded to an oil major.

It had been expected that a previously reported large parcel from the U.S. Gulf Coast would be the final movement for 2018 of material going into West Africa, but a cargo to load ex Baltic has superseded that information. Whilst that parcel will not arrive into Apapa until January, it can be recorded as the final base oil deal for 2018 into Nigeria.

Nigerian CIF/CFR offer prices are reviewed in light of the new Baltic cargo with prices expected to be slightly higher than previously announced. The ranges are extended to take account of both cargoes and are indicated at $730/t-$760/t for light solvent neutrals ranging from SN150 to SN180, $790/t-$820/t for SN500, SN600 and SN650 and $885/t-$930/t for bright stock. SN900 is indicated at $815/t-$845/t CIF/CFR.

These prices are for large parcels of at least10,000 tons total of Group I base oils delivered on a CFR or CIF basis into Apapa port, Nigeria.

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