Crude oil prices are tracking firmer this week following a dip after the United States election. Dated deliveries of Brent crude posting at $46.90 per barrel late Tuesday in the United Kingdom, while West Texas Intermediate was selling for $45.75/b, for a crack of just over $1 per barrel. ICE LS Gas Oil, representing petroleum products, was showing at $423 per metric ton in December front month trade, approximately $3/t higher than a week ago.

Having such price stability in the midst of volatility such as the aftermath of the U.S. election and more strife in the Middle East suggests petroleum products may remain flat into the first quarter of 2017. Moreover, there are few signs of year-end sell-offs by base oil producers and even fewer bids for large slugs of base oil exports out Europe.

API Group I European FOB prices are maintained this week due to a lack of clear direction from the markets. Solvent neutral 150 appears to be the only type of any grade that is not flush, tightening perhaps due to volume lost from closed refineries and eradication of this grade from some producers slates. Substitute Russian material from Baltic suppliers also reported short, with few large volumes available on a prompt basis.

Prices for light solvent neutrals are nevertheless maintained this week, awaiting information on new offers. Light viscosity grades are between $470/t-$490/t, and SN500 and SN600 are between $555/t-$570/t.

Bright stock is seeing less than normal demand for large volumes, perhaps again due to restricted trade into Nigeria. Prices for this grade are also unaltered this week at $805/t-$840/t, but with the caveat that two unaccepted offers for 3,000-5,000 tons have been issued at around $787/t, FOB Mediterranean.

The prices above refer to large cargoes of Group I base oils supplied or offered on an FOB basis ex-mainland European supply points.

Prices for trade within Europe remain flat this week with little upward or downward pressure apparent. Blenders on the European mainland and in the U.K. seem content to wait until December prices are announced – in ten days or so – before looking for year-end bargains for Group I base oils. Exchange rate variations appear to have been discounted and are now built into prices. The differential between local selling prices and exports remains between 50/t-65/t.

European Group II prices remain almost static with perhaps a hint of uptick for light grades due to tight availabilities of Group I SN100 and SN150. Importers have declared there will be no year-end discounts because supply and demand are now balanced. Some buyers contended that this could change and that there may be signs of small discounts being applied prior to end December. As happened the previous week, some sources suggested heavier grades may get trimmed. SN500 oils with fewer finished lube approvals have been marked down by around 10/t-15/t.

CIF prices continue in the same spreads as denoted previously with light vis grades between $555/t-$585/t, and 500N and 600N grades between $725/t-$785/t. Ex-tank prices are assessed around $25/t higher, or 20/t. Transportation to satellite regions incurs additional costs.

The battles continue in the Group III market, but war has not been declared. The level of fighting varies throughout Europe, the Middle East and Africa. Marketers with new production are offering aggressive prices out of tank northwestern Europe even though they claim to be comparable on quality with more established suppliers. Prices for 4 centiStoke and 6 cSt grades are heard at $680/t or 615/t, FCA.

These prices are netting back to FOB levels below $600/t ex-Middle East Gulf, as has been confirmed from sources in other markets. Smaller volumes of Group III oils with a full range of approvals, ex-storage in Antwerp-Rotterdam-Amsterdam, are reportedly priced at 705/t-735/t for the 4 cSt and 6 cSt grades, with 8 cSt material around 670/t. Prominent customers making larger CIF purchases are getting deals perhaps $25/t-$50/t lower.

Baltic and Black Seas

Baltic suppliers report continuing contract trade into Antwerp-Rotterdam-Amsterdam and German ports but with few spot availabilities for large volumes of SN150. Prices sometimes rise under such conditions, but for now they are unchanged. Prices for stocks supplied on formulas may be altered after the month end. Deep-sea trade from the region is still nil due to a lack of cargoes loading for West Africa.

FOB prices for Russian exports are unchanged this week, with SN150 at $390/t-$425/t and SN500 around $495/t-$525/t. SN900 has been offered to Nigerian, Indian and South and Central American receivers for around $575/t, FOB.

In Black Sea areas, reports suggest increasing buying is either underway or is being lined up for delivery during December. Turkish receivers seem to be the instigators, with between 3,000 tons and 5,000 tons of Group I oils being sourced from Mediterranean and Iberian sources and from Russian traders ex-Kavkaz, Russia. Group III exports from Russia are also figuring in trans-Black Sea traffic, with new production coming out of Tatneft refinery into Turkey and Ukraine. This is in addition to the material being delivered ex-Cartagena, Spain.

Group I prices in this region are indicated around $510/t-$535/t for SN150 and at $575/t-$590/t for SN500 and SN600. Smaller parcels of bright stock co-loaded with other Group I grades are indicated at around $835/t-$855/t, CIF. Russian SN500 for cross-Black Sea trade is assessed between $475/t-$490/t, CIF Gebze, Turkey.

Middle East

Red Sea fixtures include vessels for large cargoes loading out of Yanbual Bahr and Jeddah, Saudi Arabia. These cargoes will be delivered to regular receivers in locations such as Oman and United Arab Emirates ports such as Fujairah.

Iranian exports are once again the flavor of the week in the Middle East Gulf, as a number of parcels are being loaded during the second half November for Pakistan, the west coast of India and East Asia. Prices appear to have remained reasonably stable at $585/t for higher spec SN500, FOB BB and/or Bandar-e Emam Khomeyni (BIK). Iranian SN150 in smaller quantities can be had, although this grade, along with SN650, is not normally exported. FOB prices for these grades are assessed at $565/t and $525/t, respectfully. SN500 ex-U.A.E. dipped this week below $600/t and can be seen offered at $585 FCA or $595 FOB.

Group I cargoes arriving into Middle East Gulf receivers are delivered at $555/t for SN150, $625/t for SN500 and $855/t for bright stock. U.S. offers for cargoes of Group I grades have been re-routed to Indian receivers after offers into the U.A.E. were pulled. Traders responsible for these movements said receivers and potential buyers in the Middle East took too long to consider offers. U.S. offers were confirmed much lower than other imports, possibly $25/t-$50/t less than Red Sea imports.

Group III base oils from Al Ruwais, U.A.E., and Sitra, Bahrain, are loading continually as marketing companies and distributors in multiple locations clash to establish or protect market shares. Calculations for FOB prices have been bolstered this week by factoring in European FCA levels, yielding estimates of $585/t for 4 cSt and 6 cSt grades. Deliveries into Indias West Coast show CIF levels that could netback to Middle East Gulf FOB prices of $555/t-$565/t.

Group II business is reported slow in Middle East Gulf areas, though deliveries from South Korea to the U.A.E. should pick up with increasing production of transformer oils. Volumes for that business may be shipped with Group II stocks bound for Mumbai anchorage. U.A.E. sources said the past week that light Group II grades are starting to gain popularity as replacements for Group I SN100 and SN150. Prices for larger parcels are unchanged at $510/t-$535/t for light grades, and $665/t-$685/t for 500N and 600N, CIF Middle East Gulf ports.

New supply routes from European loadports into North Africa continue as an alternative deliveries that used to come from Mohammedia, Morocco. Sources in Livorno, Sicily, Cartagena and Algeciras, Spain, are all helping supply Group I to Morocco, Tunisia, Egypt and Algeria. Offered cargoes are assessed at $525/t for SN150 and $595/t for SN500, basis CIF. Small volumes of bright stock can accompany other Group I stocks and is estimated to landed into North Africa for $845/t.

Africa

Nigerias currency has depreciated to more than 315 naira to the U.S. dollar, driving up the cost of purchasing dollars, which traditionally have been required for base oil purchases. Being dependent on imported fuels and base oils, markets in Nigeria are a mess. Some have called on the government to take positive action, but crude oil exports have resumed and are earning dollars, so perhaps the worst is over.

Some parties have managed to arrange payments outside Nigeria, allowing a minimal supply of base oils going into the country, mainly in flexitanks, although a few traders have supplied bulk cargoes on an unsecured basis. Prices more than $100/t above normal levels have been reported.

A European parcel previously mentioned as destined from northwestern France to Apapa, Nigeria, has been confirmed to be an inter-affiliate sale supplied through internal accounting. Baltic cargoes still have not been, although a couple U.S.-sourced parcels have been shown to receivers in Lagos.

Nominal pricing for base oils going into Nigeria is established based on FOB levels plus freight and margin. These were assessed CIF/CFR at $625/t for small volumes of SN150 in bulk, or $685/t in flexies, ex-mainland Europea. SN500 was offered at $685/t-$720/t, with bright stock at $935/t-$955/t. Russian SN900 in flexies has been offered at $755/t, for volumes around 1,000 tons.

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