Dated deliveries of Brent crude stood at $48.35 per barrel, with West Texas Intermediate crude posting at $46.40 per bbl in front month settlement. ICE LS Gas Oil held steady at around $428 per metric ton.

Europe

API Group I prices are mostly maintained due to buyers and sellers uncertainty. FOB levels offered for light solvent neutrals remain between $480/t-$500/t, with the heavier solvent neutrals 500/600 at $565/t-$585/t. Despite expectations, bright stock dipped to $895/t-$920/t.

These prices pertain to large, cargo-sized parcels of Group I base oils supplied or offered on an FOB basis ex mainland Europe.

European regional markets are taking shape ahead of the month-end when prices for September will be set. Buyers have been particularly active this week in establishing a platform for negotiation on Group I grades, with their stall set out at target levels 25/t-40/t lower than August numbers. Whether levels will be accepted remains unknown until after Sept 1.

The differential in prices between local and export levels is maintained at 85/t-125/t, although many buyers expect to see this contract over the next few days, whilst sellers will be trying their utmost to resist price erosion by maintaining current offers.

European Group II markets were surprised by increases announced by a major U.S. supplier last week. Posted price increases of around $55/t seemed out of line with current thinking, but it remains unknown how much, if any, of this increase will be passed down to material imported into Europe. Other producers and sellers appear to be sitting on the fence.

Prices for the range of light viscosity grades are maintained at $595/t-$625/t, with heavier 500N and 600N between $735/t and $780/t, or euro equivalent. The normal premium of 50/t-120/t can be applied in respect of material being redelivered to satellite storage locations or for products sold on a delivered basis.

Growing concerns regarding a global oversupply of Group III grades is spreading throughout Europe, with fears that new production is trying to buy its way into what was considered an exceptionally conservative market where supplier loyalty remained paramount. Market shares are being redrawn on almost daily.

Without demand rising in response to increased production, there would appear to be no end to this situation, and with more availabilities from Russian and Saudi Arabian refineries targeting Europeans, the writing is on the wall. Prices for material sold on an ex-tank or truck-delivered basis ex Antwerp-Rotterdam-Amsterdam are revised downward to 795/t-820/t in respect of the 4 centiStoke and 6 cSt grades, with 8 cSt grades around 785/t.

Baltic and Black Sea

Baltic prices are reportedly unchanged, with offers for first half of September loading corresponding to those of August. Trade seems to have slowed, perhaps due to late holidays with only a couple of smaller Baltic and Continental Europe cargoes moving during the last few days. Enquiries are around for parcels from the Baltic to North Africa, although it is difficult to see how higher-freight and slightly lower-quality Russian export grades can compete with Mediterranean-sourced barrels.

FOB prices in the Baltic remain $475/t-$495/t for SN150, $545/t-$565/t for SN500, and $675/t for SN900, basis FOB. SN1200 is offered at $725/t-$740/t, basis FCA loaded into flexies.

Black Sea appears to be the action location with a number of cargoes fixed clean from Spanish and Greek sources, but perhaps reflecting not just Group I, but also Group III supplies into Turkey. Two 3,000-ton parcels into Gebze, Turkey, were reported with Group I levels assessed at around $520/t and $605/t for SN150 and SN600, respectively.

An interesting enquiry has been issued for a large parcel of some 8,000 tons to load ex Kavkaz on an STS basis, destined for Maltese receivers. Reports suggested that this cargo would form a break-bulk operation in Malta for supply of smaller parcels to North African receivers.

The parcel being worked out of the Black Sea for the multiple discharge ex U.S. East Coast and U.S. Gulf Coast is also fascinating given that this can only be Group I Russian export material comprising of three grades. More information on this trade is being sought. Another parcel of around 5,000 tons is moving from Kavkaz, Russia, to Antwerp-Rotterdam-Amsterdam. Intra-Black Sea offers for Russian SN500 are $575/t-$595/t basis CIF Gebze, Turkey.

Middle East Gulf

Red Sea news reports are that the shipping enquiries posted last week from Saudi producers appear to have been covered for a raft of supplies into Middle East Gulf, the west coast of India and Singapore. Aqaba, Jordan-based sources have gone quiet with no further news regarding supplies ex Baltic finding a way into this market. Instead, Middle East Gulf suppliers using Iranian export Group I grades have expressed interest in offering material to Jordan.

Sources offered possibly sensitive information regarding cargoes into Syria and Lebanon being delivered using Russian Federation-flagged vessels, the movements of which are kept strictly private and confidential. Information on other regions such as Iran and Iraq was not available, but the region continues to supply finished lubricants to government and military users. Obviously no pricing information was available.

In the Middle East Gulf, base oil trade has taken off big time, with imports of large quantities of Group I material coming in from Saudi Arabia, Europe and the U.S. coupled with exports of huge quantities of Group III base oils from Bahrain and Al Ruwais, United Arab Emirates. One reported item this week has identified more than 30,000 tons of Group III grades to be exported from Abu Dhabi to the U.S., Europe, India and the Far East during the first half of September. This will possibly be in addition to other barrels which are either on the water or are primed for loading during the second half of next month.

FOB prices in respect of these grades appears to be guarded with no supply source nor receiver willing to divulge information on loaded numbers or CIF values. It must therefore be assumed that the sensitivity of these prices means that levels may be far below market expectations, merely to establish supply into a market already served by competition.

Iranian Group I base stocks are still moving out of Bandar-e Emam Khomeyni (BIK) and Bandar Bushehr, with SN500 Empowered, (the up-spec version of this grade) available from the Sepahan refinery being offered at $605/t FOB. Lower-specification grades from other Iranian sources are available with corresponding lower prices of around $555/t. The SN500 Empowered grade offers guaranteed viscosity index of min 90, color around 1 and a pour point of max -6 C. Quantities of SN150 are available in smaller quantities at around $545/t FOB.

Group II imports into Middle East Gulf regions remain subdued, as only a handful of local blenders seem to use these grades. Offers still arrive from Far East and U.S. refiners, with attractive prices which under normal market circumstances would be snapped up.

A new transformer oil production facility at Hamriyah, in Sharjah, U.A.E., be importing large quantities of Group II base stocks probably from existing Far East suppliers. This project will expand the regions production for transformer oils, and will open up the local market in the U.A.E. and other Middle East Gulf locations to a new source for these lubricants. Group II prices for offers into the Middle East Gulf remain $600/t-$625/t for light vis grades and $765/t-$790/t CIF for heavier 500N/600N.

Africa

Offers for Group I grades in flexies shipped to eastern African ports have been indicated at $590/t for SN150, with SN500 offered at $655/t. These relate to Russian export grades loading either out of the Baltic Sea or Black Sea. Regular bright stock prices were unavailable, but lower-quality bright stock available ex Baltic traders can be delivered at around $845/t. All prices are CIF ports including Mombasa, Dar es Salaam, and Durban.

West Africa appears to be taking a break from proceedings with few, if any, cargoes nominated for prompt loading for Nigeria. An Italian source will probably supply the next Ghana requirement delivered under the Tema contract, which will load during the first week of September.

Offers for U.S. parcels are on the table with two or three receivers in Apapa, but with buyers considering that prices may drop, there appears to be an impasse.

Levels in respect of Baltic and European material are confirmed through agents with small quantities of SN150 at $543/t, large parcels of SN500 at $618/t, and mainstream European bright stock at around $978/t all basis CFR/CIF Apapa. Russian SN900 is not confirmed in the same cargo, but is estimated to land at around $770/t.

Rerefined, high viscosity index SN150 is offered in flexies delivered CIF Apapa at $488/t in respect of quantity of minimum 100 metric tons (5 TEU containers).

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