With crude oil breaking through the $88 per barrel barrier for Dated Brent, and WTI showing at $87.30/bbl, the writing is on the wall regarding overall sentiment in the oil markets.

International Commodity Exchange gas oil has moved upwards by some $50 per metric ton since last week, showing that the recent crude rises of some $3/bbl over last week are having the natural effect of pushing up petroleum product prices.

Vacuum gas oil prices have made similar upward moves through the last seven days, and will exert more pressure on raw material costs for base oil producers.

Reports from suppliers are bullish to say the least, with more than one European refiner stating that base oils will have to rise again to take notice of these latest moves in crude and products.

With some form of resolution to the French civil unrest, reports from refineries in the countrys north state that production is starting to get back to normal, but it will take some time to rebuild stocks of all petroleum products.

Not all the labor problems have been solved, and some say there could be a recurrence of shutdowns and outages if strike action resumes. Another strike day has been called for Nov. 23, but this one-day stoppage is not expected to have any dire consequences for French refineries.

Cargoes of all products have started moving out of shore storage tanks, but exact news as to base oil movements remains unclear.

European prices remain almost as per last week, with small marginal differences where some local prices moved as a result of buying interest. Levels are in the ranges of $1,020 to $1,060/t for API Group I light solvent neutrals, and between $1,050 and $1,120/t for the heavier grades.

Bright stock remains in the same band as last week with no reported sales taking place. Price offers of this base oil are at $1,320 to $1,345/t, with offers for second-half November at the higher end of this range. All these prices are based on FOB sales from mainland European and North African suppliers.

Most producers are pressing for these levels to move upwards by perhaps $10 to $25/t over the next few days and weeks, but with few transactions taking place, it is difficult to report current prices as having risen already.

As mentioned above, there have been relatively few buyers coming to the market this week with any real enquiries, suggesting that perhaps some players are looking elsewhere for supplies rather than through traditional sellers.

With little positive movement being witnessed from the Far East, the pressure may be building for alternative supplies coming from that region.

Group II/II+ prices are moving upwards within Europe, and imported material is now firming at levels above Group I prices. The latest November numbers for these grades are heard to be around $1,055 to $1,100/t for the light grades, and $1,090 to $1,155 for heavier vis grades.

Availability of Group II material is not abundant, and with new interest in purchasing these grades, not all demand has ultimately been met. Suppliers have reported that they are in process of renewing inventory levels after outages from source supplies, and are building sufficient stocks to serve demand for the first quarter of next year.

Much of this business is term contract, and during December importers will be looking to secure their portfolios for 2011.

Group III is the enigma. Grades of this material are again stated to be in short supply, and not all enquiries for supply of the two main grades are being fulfilled.

The larger blenders and some majors are reported as buying much of the available stocks of this material both from importers and also from European domestic production, small as it may be at this time.

Prices are maintained at Nov. 1 levels, and are still reported at between 1,235 and 1,265/t for 4 cSt material, with 6 cSt material being sold at 1,280 to 1,320/t on basis of delivered quantities by road truck within European mainland.

Russian Baltic supplies have been rarely seen this week, with only one small cargo lot of some 700 tons of SAE10 being spotted for sale out of Liepaja. This quantity will probably remain in tank awaiting further supplies to make a shippable cargo, or else may be used for filling flexi-bags for supply to deep sea locations.

However, with prices for these grades now in a band of between $1,020 and $1,035/t, it is unlikely that this quantity can compete with supplies from the Middle East Gulf or Far East for containerized supplies to West and East Africa, and other destinations such as South America.

Other Russian supplies of light neutrals are being sought by Turkish buyers in the Black Sea, but availability is poor, and any offers are being made at prices which are deemed unacceptable to Turkish importers.

Prices for these grades delivered mainland Turkey are suggested at $1,030 to $1,050/t, whereas buyers are prepared to pay only $950 to $970/t CFR.

Middle East Gulf prices continue to move slightly upwards, but bearing in mind these prices started from a much lower base point, they are merely playing catch-up to both European and Far Eastern Group I levels.

Only one cargo has been notified this week as coming out of Iran, that being 3,000 tons of SN 500, which is programmed to load out of Bander Bushire during the first ten days of December. Price for this material is quoted at $885/t, although quality for this particular grade is slightly lower than other supplies which are heard of at around $920/t, for similar shipment dates and quantity.

Saudi Arabian prices have maintained last weeks rises with no news of further increments as yet.

Many West African receivers breathed a sigh of relief that the French strike situation shows signs of improvement, and that supplies of base oils may start to filter into areas such as Cote dIvoire and Senegal. One supplier is maintaining the prices at which the material would have been delivered, prior to the strike action taking place. A rare and noble gesture in this market.

Ghana and Nigeria whilst not being directly affected by the French problems, have seen a couple of supplies diverted to other receivers in adjoining areas normally supplied by French barrels, which may originally have been bound for Apapa or Tema.

There are a couple of regular enquiries from the usual importers in Nigeria, but surprise and shock have been the order of the day when it comes to the new prices being offered.

Price levels for solvent neutrals are now placed in the region of $1,120 to $1,145/t for SN 150, and $1,165 to $1,185/t for the heavy neutrals. Bright stock, the backbone grade of supply into Nigeria, is now being offered at $1,390 to $1,430/t. All grades are offered on the basis of CFR Apapa port.

Completing the picture for the African mainland, most East Africa and South African buyers appear to be sated for the rest of 2010, with adequate inventory to see them through until next year. They are now looking for offers for supplies arriving in January.

Suffice to say that most sellers have declined to even indicate prices for supplies that far in advance, stating that they would want to wait until mid December before showing their hand. Such is the uncertainty of the scale of possible price increases in the EMEA market.

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.