Such circumstances would normally stir caution in large West African and Middle Eastern buyers, but they do not appear to be doing so at the moment. It is true that some receivers have opted to take smaller volumes in flexitanks to tide over inventories until the market gains clarity.

Crude levels have dipped to new lows, with prices for dated deliveries of Brent falling below $53 per barrel in early Tuesday trading, but later rallying to be pegged at $53.50. West Texas Intermediate has mirrored the downward trend and is logged at $48.15, maintaining the crack between this marker crude and dated Brent. ICE gas oil has in recent days fallen below the $500 per metric ton barrier and now trades at around $493/t for front month settlement. With news that Iranian sanctions may be lifted, forecasts for crude pricing are now extremely bearish, with some predicting dated Brent will fall to $45/bbl.

Europe

Base oil prices within Europe are rather confusing, with sellers insistent that demand for higher viscosity Group l grades justifies higher prices that they are offering, while buyers argue that raw material costs are falling and other petroleum products becoming weaker by the day. Buyers say they are unwilling to pay higher prices, even against shortfalls in availabilities, since they believe base oil values must be aligned with crude and feedstock prices.

All this is happening during a period when normally the markets would be quiet, with holidays being observed throughout Europe, the Middle East and Africa.

There are offer Group l prices from hopeful sellers who have pitched numbers higher than last week, and at the same time there are counter bids from serious buyers who are looking for lower FOB levels than quoted in the last report.

One thing clear is that light oils are facing a falling market, with producers offering light solvent neutrals at prices some $10/t lower than last week and buyers countering more than $25/t below last week. This columnist has decided this week to report the lighter neutrals on a lower basis than previously, but to maintain levels for the heavier neutrals until the ground is established between offers and counters.

Therefore light solvent neutral 100 and SN150 are now priced at $510/t-$525/t but with the heavier neutrals remaining between $560/t and $575/t. Bright stock is also maintained at $925/t-$945/t but in some cases is subject to a spread of more than $50/t between seller’s ideas and buyer’s expectations.

These levels refer to export parcels of Group l base oils, which may be offered from mainstream sellers based within Europe.

As mentioned, local sales have all but ceased for the next four or five weeks with only routine contracted or pre-arranged supplies of Group l base oils filtering through to those blenders who are maintaining production during summer. With maintenance shutdowns scheduled at numerous European blending operations, many buyers are operating with skeleton staff, only keeping the lights burning until after August.

With few domestic prices to use as reference, and the confusing picture with export sales, the differential between higher local prices and export levels is maintained at 65/t-85/t.

Group II prices have split in that the light vis grades (perhaps with the exception of the very light 65 neutral) are experiencing price weakness, whilst the higher vis products such as 500N and 600N have been the subject of increases by both overseas sources and local traders – the latter amounting to around $10/t-$15/t, or euro equivalent. There is overall healthy demand for heavier grades within the European markets, while lighter Group II oils are now competing against Group l light neutrals.

The market for Group lI products within the European boundaries is very much akin to the domestic or local Group l markets, where many buyers are blending operators who are running minimum activity over the next few weeks. Prices are therefore maintained at stated levels with light grades $705/t-$745 and higher viscosity material at $780/t-$845/t. These prices apply to Amsterdam-Rotterdam-Antwerp ex tank sales.

Group lII prices are left unchanged this week, and will possibly remain unaltered until the end of August. Truck prices are assessed for the 4cst grades between 895/t-910/t and 6cst material between 910/t-930/t ex tank Amsterdam-Rotterdam-Antwerp.

Baltic and Black seas

Russian exports from Baltic Sea ports can be described as stable with few reports of any large contracts being expedited for foreign destinations. A couple movements from lower Baltic ports and Liepaja, Latvia, were noted moving into Amsterdam-Rotterdam-Antwerp during first half August, which will probably form the basis for the first sales into blenders in Benelux after the summer holidays. Enquiries continue to hit the Baltic market for Far East receivers looking for heavier grades including bright stock, but this grade is not available ex Baltic in large quantities. No new Nigerian cargoes have been announced this week, possibly reflecting that receivers in West Africa may be playing a waiting game, waiting for base oils to follow crude and feedstock prices downwards.

FOB prices for SN150 and SN500 are maintained around $510/t and $555/t, respectively. SN900 is available in limited volumes at prices heard around $595/t, FCA, along with various bright stock grades of varying specs, which are banded between $790/t and $845/t, basis FOB. These grades are only available in small quantities and are mostly sold in flexies with CIF prices depending on destination port.

Likewise, Black Sea reports are thin on the ground with only a few enquiries for European mainland cargoes from Mediterranean, Atlantic and Northwestern European sources. There have been no STS parcels ex Kavkaz, Russia, nominated this week, with Russian supplies possibly limited into this region.

Mainland European supplies into Turkey are being talked CIF around $535/t for SN150, with SN500 quoted around $575/t and bright stock at $1,015/t-$1,035/t.

Middle East

Middle East Gulf sources report quiet markets after the Eid holidays with few sellers or buyers participating at this time. There has been one continuing enquiry for a large parcel of around 10,000 tons to be moved ex Baltic to the U.A.E., but no confirmation has been gleaned as to the likelihood of this movement.

The Iranian market appear to have come alive, but with holidays in the region it may be another few weeks before first, the official sanctions are withdrawn, and second, sellers and buyers return to the marketplace. On offer are a couple large parcels of Group l grades, mainly SN500 coming out of Bandar Imam Khomeini port, and since prices for such material have weakened again, there may be buyers in the U.A.E. and on the West Coast of India that would be interested to take volumes ranging up to 8,000 tons. Prices for Iranian SN500 are now being heard around $565/t, basis FOB southern Iranian ports, but confirmation of this new low level has not yet been forthcoming from sources.

Supplies of local and Saudi Group l are $575/t-$620/t for the range of solvent neutrals, while bright stock is priced at $995/t-$1,025/t, CFR/CIF the U.A.E. These levels have firmed some $10/t for SN500 and bright stock. Whether these levels will be accepted is still to be confirmed by receivers who are continually looking for lower prices, citing Irans potential return to the market and falling crude levels, which are perhaps more significant. A Mediterranean cargo is under discussion for some 5,000 tons of Group l products, mainly bright stock, coming from Italian sources.

Group II discussions are absent from Middle East Gulf markets at this time, with suppliers trying to push higher numbers for heavier grades and buyers simply ignoring offers. Prices for August have been difficult to pin down since few cargo movements of Group II are slated to arrive into the region next month.

Prices are only listed this week based on FOB levels plus freight costs, and are pegged at $645/t-$665/t for light grades and $820/t-$840/t for heavier grades.

Africa

New reports are coming from South Africa of offers for Group l material delivered in flexies into Durban, with confirmation of CIF price levels at $675/t-$725/t for solvent neutrals and bright stocks of various qualities offered at $965/t-$1,030/t. Naphthenic base oils are also being imported into South African markets, but price information on these grades is scant.

West African markets are busy this week with the arrival of base oil cargoes loaded from European and Baltic sources. Other talks surround the possibility of moving two parcels of around 30,000 tons of Group l base oils from United States Gulf sources to Nigeria or other parts of West Africa, although at least one of these parcels has been in the pipeline for weeks without any agreement being reached.

Offered prices have not moved much this week, with many receivers in Nigeria stating that they want to wait until the second half of August to see if prices fall. Some have elected to take smaller parcels to bolster inventory rather than committing to take large slugs of oil that might carry lower prices in the near future. The amazing fact is that deliveries in flexies can be lower priced due to container freight being lower.

Prices this week are maintained at previous delivered levels of $635/t-$695/t for solvent neutrals and offers for of light Group II grades, but with bright stock offers some $20/t higher. This hike may not bite, but traders are being obliged to pass on FOB increases, which have been implemented on bright stock producers. These increases put values at $1,070/t-$1,095/t, basis CFR/CIF.

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