Dated deliveries of Brent crude rose again this week as European refiners took advantage of opportunities to move refined products into the U.S. and other areas stricken by hurricanes. Temporary shutdowns of U.S. Gulf Coast refineries curtailed output of refined products, and while most companies have buffer stocks for emergencies, replacement cargoes are required to stabilize the markets even after re-starts at many refineries.

Dated Brent posted in London yesterday at $54.20 per barrel for November front month settlement. West Texas Intermediate, a U.S. benchmark, was more stable and settled at $48.20/bbl, also for November front month. ICE LS Gas Oil went for $514 per metric ton, on par with last weeks new high.

Europe

European values for API Group I exports were described as stable to firm, with seeming consensus that feedstock prices are exerting upward pressure on base oils. It is worth noting that buyer counteroffers are being dismissed by sellers who express confidence that they will achieve asking prices.

Some suggested the market is tightening this week, as demand increases for Group I cargoes for deep-sea export markets such as West Africa, Central America, and now the U.S. Availabilities do not seem to be under any real pressure, although there have been sporadic reports of one or two grades becoming snug.

Prices for light solvent neutrals are assessed slightly higher at the lower end of the bracket to $685/t-$700/t, while SN500 and SN600 remained at $765/t-$785/t and bright stock was flat at $875/t-$895/t. These prices refer to large cargo-sized parcels of Group I supplied or offered on an FOB basis from mainland European supply points.

European domestic prices appear to be unfazed by all of the commotion. Since most local prices are fixed on a monthly basis or on volume offtake, current levels may remain in place until the end of the month. Blenders are not rushing to replace inventories after the summer break, but seem to be content to cover requirements for a month or so at a time.

There have been a number of nominations for cargoes coming out of the Baltic for break-bulk trade in Antwerp-Rotterdam-Amsterdam and the east coast of the United Kingdom. These supplies are helping fill a void created when Northwestern European refineries closed or curtailed production of some grades.

European sales are also being affected by the euros increase in value relative to the dollar. The differential between intra-regional ex-tank or FCA prices and export values is unchanged this week at 65/t-95/t.

Group II imports have been the main point of discussions this week, due to constraints on sourcing from the U.S. Gulf Coast after two hurricanes. One major importer has issued shipping inquiries to load during the first half of September as normal. It remains to be seen if operations can accommodate it. Other importers may be subject to refinery flooding that could impair base oil production and routine movements of Group II into Europe.

Light viscosity Group IIs remain at $640/t-$665/t and 500 neutrals and 600N at $775/t-$815/t, basis CIF Antwerp-Rotterdam-Amsterdam. FCA prices ex-supply hubs remain 755/t-790/t for light-vis oils and 855/t-890/t for heavier grades.

With more cargoes being announced for import into Northwestern Europe from Middle East Gulf sources, Group III demand appears healthy. However, an over-supply could still develop in this segment as producers currently running at less than capacity could look to ramp up output.

Group III prices are unaltered from last week: $785/t-$810/t for 4 centiStoke and 6 cSt grades or 680/t-705/t for regional sales conducted in euros FCA Northwestern Europe. Products with full slates of finished lubricant approvals offered FCA Antwerp-Rotterdam-Amsterdam are 780/t-815/t for 4 cSt and 6 cSt oils and 755/t-775/t for 8 cSt. These prices refer to local markets where material is being sold or delivered ex-tank. Bulk sales to major receivers carry discounts as high as $60/t-$75/t.

Baltic and Black Seas

Baltic trade is lively with another cargo fixed for discharge into Lagos, Nigeria – this being in addition to the cargo identified last week which, it is believed, is still being worked for loading in the second half of September. Smaller parcels are being loaded for short-sea trade to the U.K.s east coast and Antwerp-Rotterdam-Amsterdam, and more are in the pipeline for later this month. Smaller quantities are also being discussed for shipment to Nigeria, where the market is pushing boundaries for base oil demand.

As in mainland Europe, Baltic markets are described as stable to firm, with sellers adding small increments to prices already offered, arguing that availabilities are much shorter than previously encountered. These days most offers are valid for around 15 days, compared to a couple months in the past. Demand remains healthy, with fixture prices only marginally adjusted after buyer counters.

Prices are slightly higher this week, particularly at the low ends of the ranges: $675/t-$690/t for SN150, $745/t-$770/t for SN500, $845/t-$860/t for SN900 and $895/t-$945/t for bright stock from southern Baltic sellers and other sources, all basis FOB.

After thin trading last week, the Black Sea saw a surge this week of trading into Turkey and shipments to more distant destinations. The large parcel of Russian barrels mentioned last week has been nominated for shipment to Antwerp-Rotterdam-Amsterdam, where it is thought they would join a large cargo bound for South America. Twelve thousand tons of material has been loaded on an STS basis ex-Kavkaz, Russia. Prices are estimated at $730/t basis for SN500, $815/t for SN900 and $645/t for SN150, basis STS. These prices are exceptionally keen and based on buyers accepting large tranches of material as availability allows.

Offers for Russian SN500 delivered to Gebze, Turkey, on a CIF basis are assessed higher this week at $790-810/t. SN150 and SN500/600 from Greek and Italian suppliers are assessed $710/t-$725/t and $798/t-$820/t, respectively, CIF Western Turkey ports. Bright stock offers from an Italian source are reckoned to be around $915/t-$935/t, CIF Turkish ports, when co-loaded with other quantities of solvent neutrals.

Middle East Gulf

In the Red Sea, plants in Yanbual Bahr and Jeddah, Saudi Arabia, are reportedly looking to move more than 15,000 tons of various grades to contracted receivers in Oman and the United Arab Emirates.

With Iranian production flowing again, exports are growing in number and quantity. In addition to smaller, routine cargoes into Sharjah, three or four large parcels were sold to the west coast of India and Pakistan. Up to 25,000 tons of premium SN500 will be shipped out of Bandar Bushehr, Bander Abbas and Bander Khomeini in coming weeks.

Prices have firmed by around $10/t in the past few days for the regular exports of SN500 to around $645 FOB, based on netbacks from delivered parcels into Karachi and Mumbai anchorage. The Iranian SN150 and SN650 cargoes that had been traditionally available – possibly from alternative domestic sources – no longer appear to be around.

Group III exports from Al Ruwais are back after a respite, with large cargoes moving to Mumbai and Sharjah. The largest movement, some 12,000 tons, went to receivers in Lagos, Nigeria. This is the first known cargo of any base oil other than Group I to move into western Africa, and has apparently been completed at the behest of some of the majors blending in that region. This interesting movement may spark other opportunities for Group III and also Group II base stocks to enter this market. Prices werent disclosed, but with substantial freight costs, it is estimated that landed prices wouldve been $850/t-$900/t, CFR/CIF Apapa.

FOB numbers calculated for Group III base oils out of the Middle East Gulf remain unchanged. FOB levels established using netbacks from receivers in the west coast of India work out to be $645/t-$675/t in respect of the 4 cSt and 6 cSt grades loading out of Al Ruwais. Sitra Neste 4 cSt and 6 cSt material is around $725/t and the 8 cSt grade is estimated at $695/t-$700/t.

FOB levels are indication only based on netbacks using nominal freight, handling and marketing costs for cargoes delivered into Europe, U.S., the west coast of India, and the Far East. The delivered CIF prices are sourced from contacts in the various regions and pertain to large cargoes sold to large buyers and distributors.

Few changes to Group II pricing have taken place. U.S. offers are still in the market, but one contract for a bulk quantity of Group II grades has been withdrawn under force majeure terms, presumably due to effects of Hurricane Harvey. This offer and subsequent contract sales will probably be reinstated after repairs are completed.

Group II from the Far East and U.S. sources remains offered out of storage in U.A.E. on an FCA- or truck-delivered basis at $810/t-$825/t for light-vis grades 100N, 150N and 220N – with 500N and 600N between $825/t and $870/t CIF Middle East Gulf.

Africa

Around 12,000 tons of base oils and drilling fluids are expected to load in late September for South African receivers at multiple ports.

A Ghana tender has been covered on a standalone shipping basis without the addition of extra quantities of Group I base oils into Guinea and Cote dIvoire. Requirements to the latter locations are being covered under one of the Baltic loadings into Nigeria.

At least one fixed-clean cargo is awaiting repairs from hurricane damage in the U.S., but with the confirmation of the first Baltic cargo this month, traders have suggested that there may be up to three additional parcels out of the Baltic before October. These are pending confirmation of banking instruments being in place in Nigeria.

Group I imports prices were tweaked upwards after one Baltic supplier moved ahead by some $10/t. These increments have brought this supplier in line with alternative outlets, making it simple to put one level of pricing on cargoes into Nigeria. Reviewed CIF/CFR prices relating to Group I base stocks are $780/t-$795/t for more than 1,000 tons of SN150, with SN500 and SN600 delivered into Apapa between $865/t-and $878/t. SN900 is moved up to $948/t-$963/t, with bright stock between $1,015/t and $1,055/t.

All prices for Nigeria are in respect of Group I base oils delivered CIF/CFR Apapa, Lagos, or Port Harcourt.

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