Demand is also mostly lacking, except for some niche markets such as API Group I. There are some planned turnarounds – such as the Nynas Harburg installation – on the horizon, which may put more pressure on Group I avails.

Currently, dated deliveries of Brent crude are trading some $7 per barrel higher than last week, at above $54 per barrel, then around $49.25 per barrel yesterday. Similarly, West Texas Intermediate has moved up to around $45.10 per barrel. Feedstocks have also seen a reversal of trends, with ICE gas oil moving to $473 per metric ton, some $50/t higher than last week. These wild swings are attributed to lower U.S. inventories and the suggestion of rising demand, but increments of some 18 percent in a few days despite increasing quantities crudes are untenable.

Europe

Group I FOB levels within European markets have been marked down further this week, with final levels very much dependent on grades and availability. Light solvent neutrals appear to have remained at $485/t-$495/t. As with last week, sellers’ offers contain prices above $500/t, but are cut back due to buyers ideas being much lower.

Heavier material SN500/600 are remaining more buoyant with both export and domestic demand. Export prices have come off a little during the past week and offers heard at the end of last week (prior to crude and feedstocks moving upward) were $545/t-$560/t. Some sellers have maintained much higher levels, at which theyve not been able to close deals.

With healthy demand, bright stock levels are maintained at $880/t-$910/t.

Export FOB numbers refer to offers and sales of Group I base stocks available ex mainstream European supply points.

Domestic and local markets are beginning to come back to life after the summer recess, and a number of key blenders are reportedly in the market for replenishment stocks to carry them through the year. A number said theyve had to alter their purchase slate over the last few months since a number of traditional suppliers cannot cover some of the normal requirements. This seems to apply to the lighter grades in instances where refiners are either cutting back, or have scrapped production altogether. The slack in supply is being readily taken up by buying Group II light vis material, which is slowly becoming more cost effective as well as technically beneficial.

Differentials in pricing between export sales and prices relating to Group I domestic supplies are maintained at 50/t-65/t.

Group II prices within Europe appear to be relatively stable with few reports of adjustments, only rumors of some prices being realigned after Sept. 1. The announcements of price decreases by producers in the U.S. some ten days ago may start to influence levels in Europe and spot sales considered into Middle East.

Once again the lighter vis grades appear to have taken the hit on price adjustments, with heavier vis products mostly unaffected. In one case a supplier is looking to increase current levels, although in this economic climate this is perceived to be difficult.

Prices in respect of the range of light grades are lowered this week to $595/t-$640/t with heavier products 500N and 600N maintained at $770/t-$835/t.

Buyers of Group III grades within Europe are reporting that new prices will be applied in some cases effective Sept 1., although levels heard this week mean that prices will only change 20/t-30/t. Some buyers are looking for larger decreases and this may become clearer over the next week or so, when price notifications are received.

Prices are expected to fall to 865-885/t for the 4 centiStoke grades; 870-895/t for the 6 cSt material sold within Europe ex tank Antwerp-Rotterdam-Amsterdam.

Baltic and Black Sea

Baltic prices in respect of Russian- and Belarussian-exported base oils are once again rather confusing, with some suppliers looking for relatively high prices for heavier grades SN500 and SN900, whilst others appear to be content to follow the mainland markets downward for all grades, with FOB prices for SN500 indicated at around $545/t and SN900 at $685/t. Higher levels are heard at around $585/t for SN500 and as high as $755/t for quantities of SN900. Agreement appears to be the case for quantities of SN150 indicated at $475/t-$485/t.

This variation appears to be a function of which refinery is the ultimate supplier, and is varying due to differing ideas on what prices can be achieved at refinery gate.

Black Sea trade reports a number of cross cargoes loading out of Azov and Batumi, most of which are going into Turkish ports Gebze and Aliaga. These are in addition to Mediterranean-sourced cargoes ex Greece and Italy.

Levels for the two main grades, SN150 and SN500, are assessed at $520/t-$575/t on basis CIF Turkish ports, with Mediterranean bright stock landing at around $925/t. The cargoes being worked for imports into Middle East Gulf regions appear to have been put on hold, perhaps as a result of new low price levels available for large quantities of Iranian material in that region.

Uzbek light vis material SN150 can be available in quantities of around 2,000 tons at around $510/t CIF Gebze.

Middle East Gulf

Base oil markets in Middle East Gulf regions are starting to regenerate after the summer break. Iranian supplies of predominantly SN500 have again been the talking point, with the revelation that there are large stocks available for export out of Iran, bringing prices down further. One report from United Arab Emirates was that more than 50,000 tons of base oils could be available ex Iranian producers over the next month. This obviously takes account of material already in storage either in BIK or in U.A.E., but even so, this is a surprising quantity.

Offers received late last week were $465/t for large quantities of SN500. Other grades such as SN150 and SN650 are also available, but levels were not included in the offer. The conclusion would be that SN150 may be around $10/t lower and $15/t-$20/t lower for SN650, FOB southern Iranian ports.

Bright stock has been offered ex Europe and U.S. for receivers in Middle East Gulf, but buyers in this region are looking for ever lower prices in respect of this grade with ideas now around $930/t CIF U.A.E. This will be difficult if not impossible with current offers of $975/t-$990/t.

Group II offers coming in from the Far East and the U.S. are on the table with a few Middle East Gulf receivers, but prices are still deemed too high. Buyers attribute the downturn in the Chinese markets to dulling offtake and hence prices, and also the recent source discounts announced by U.S. producers for all light vis grades. With an obvious preference for heavier vis grades, regional buyers indicate that they would expect these decreases to be applied to Group II 500N and 600N as well.

Prices have been adjusted downward, but importers are looking for discounts of more than $50/t-$60/t against offered levels. Perhaps the latest crude and feedstock hikes will take the wind out of these buyers’ sails. Levels are down from last week for light vis grades to $590/t-$610/t, but heavier material 500N and 600N remains at $775/t-$790/t basis CIF/CFR.

Africa

East African and South African markets report little activity other than a number of imports of SN150, SN500 and BS150 in flexies making their way into the usual ports of Mombasa and Durban. CIF prices in respect of these imports will possibly reflect Iranian export levels ex U.A.E. which are assessed at $685/t-$700/t for SN500 and around $1110/t for bright stock.

West African sources are unhappy at offers out of the Baltic for supplies of Group I base oils into Nigeria. They said that with European mainstream prices falling back, Baltic levels should be proportionately lower too.

European suppliers do not have the raft of grades such as SN900 which receivers in Nigeria are keen to buy, hence receivers cannot cover all requirements from mainland European sources. This may be a clue as to why SN900 prices are being pushed higher toward bright stock levels.

Delivered prices for Group I material arriving into Nigeria are assessed at $555/t-$630/t for the solvent neutrals SN150 through SN500/600. Bright stock parcels are estimated to fall between $995/t and $1025/t delivered, but now with SN900 ex Baltic priced around $885/t, based on recent FOB levels plus freight.

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