In late Tuesday trading dated deliveries of Brent crude posted at $55.35 per barrel for February front month settlement, while West Texas Intermediate crude went for $53.25/bbl. Both levels were very similar to last week. ICE LS Gas Oil was likewise nearly level at around $488 per metric ton, but for January settlement.

Europe

API Group I FOB prices for base oils coming out of Europe were nearly flat this week, and with thin buying, reckoned to remain so over the festive period. Light solvent neutrals were reported scarce, but with few offers and fewer buyers, prices were unchanged at $520/t-$535/t, while SN500 and SN600 remained at $565/t-$585/t.

Surprisingly, there have been a number of enquiries received by sellers over the last few days for substantial volumes of bright stock, which could create upward pressure in January. For now, this grade is assessed at $795/t-$820/t. Many suppliers said they plan to stand pat until after the New Year, when markets have taken time to absorb the effects of crude costs.

Prices within Europe for Group I trades were unchanged with no reports of any new trade. A few contracted deliveries are still moving by truck and barge from storage in Antwerp-Rotterdam-Amsterdam-Germany, northwestern France and United Kingdom terminals, but blenders are running down this week. Most plants will shorten operating hours this week until after the New Year. For the record, the differential between domestic prices and export levels remains 25/t-85/t.

Once again there was no sign of price hikes for Group II oils in Europe, with only one major U.S. producer announcing source increases of around $60/t effective Jan. 1. Group IIs probably face upward pricing pressure due to crude movements, and there were no reports within Europe of year-end discounting. The U.S. dollars run-up against the euro also exerts upward pressure.

As with Group I stocks, the direction of Group II pricing will probably become evident in January.

In the absence of firm local announcements of movements, prices remain at $555/t-$585/t for light grades with full finished product approvals and $725/t-$785/t for 500N and 600N, all basis CIF. Ex-tank prices remain around $25/t-$40/t (20/t-35) higher.

Group III prices throughout Europe continue to come under downward pressure and are eroding at an accelerating rate. Lower prices have been confirmed for stocks from new sources outside Europe and lack full slates of approvals. A domino effect is at work as new players discount prices to gain market share and established suppliers do likewise to remain competitive.

Prices for partially approved 4 centiStoke and 6 cSt grades have slipped to around $660/t, FCA Northwestern Europe. Due to the current exchange rate, selling prices in euros are yielding smaller dollar netbacks. In contrast, prices for fully approved stocks, FCA Antwerp-Rotterdam-Amsterdam, remained 705/t-735/t for the 4 cSt and 6 cSt grades, with 8 cSt oils at 670/t, though the dollar equivalent of these prices is falling. CIF levels for large cargoes of Group III base oil are now assessed $25/t-$50/t lower than the equivalent dollar prices for FCA sales.

Baltic and Black Seas

Baltic trade seems to be limited to short sea trade movements to Antwerp-Rotterdam-Amsterdam and the east coast of the United Kingdom. Some 15,000 tons to 20,000 tons of Group I Russian export barrels have been booked to be shipped during the second half of December, perhaps partly to reduce terminal storage levels at year end for accounting purposes. There is no word of new large cargoes bound for West Africa, but with prices being reported as stable, many are predicting that traffic will start to increase in January after the European and Russian Orthodox Christmas celebrations.

Russian SN150 is still short for larger volumes, with availabilities of Belarus material at much higher prices. Prices for Russian SN150, SN500 and SN900 are therefore maintained at $495/t-$520/t, $525/t-$545/t and $595/t-$620/t respectively.

Turkish buyers are out on the markets with one large requirement for some 5,000 tons to 6,000 tons of Group I grades to be delivered into Derince during the second half December. Other receivers said they are not looking to purchase Group I oils before years end unless prices drop extremely low. Such panic selling seems unlikely since many of the Mediterranean refiners are limiting base oil output in favor of gas oil, which appears to have higher margins. There no reports of Russian export cross-Black Sea trades. A Group III partial cargo for Varna, Bulgaria, has been shelved and replaced by options for full-cargo volumes going directly into Le Havre, France, from Al Ruwais, U.A.E.

There are still offers on the table for prompt availabilities of Group I from Mediterranean sellers. Buyers are calling for lower prices to make these sales happen, whilst sellers may now be looking for higher prices in light of feedstock costs. This situation looks like an impasse that could curtail year-end bargains.

Prices for SN150 are $535/t-$555/t, with SN500 and SN600 at $605/t-$635/t. Small parcels of bright stock in combination with solvent neutrals out of Spanish and Italian suppliers can be made available at around $880/t, CIF Turkish ports. These prices are some $10/t higher than in early December.

Middle East

Unconfirmed reports from the Syrian and Lebanese regions imply that base oil imports into this war torn region have all but ceased and that there has been a large shift to finished lubricant imports from sources in Black Sea and Iran. These products are being transported in drums by road. No price information is available.

Activity in the Red Sea region is limited to another large Group I cargo being shipped out of Yanbual Bahr and Jeddah, Saudi Arabia, on a prompt basis. This consists of base oils sold on contract into the U.A.E. and the West Coast of India. No further news has been gleaned about a previously reported inquiry from Sudan, suggesting that the business may have been awarded locally to incumbent suppliers rather than receivers accepting trader offers from other sources.

Sources report an 8,000-ton parcel of Group I SN500 being shipped out of Bandar Bushehr, Iran, to the West Coast of India, and with prices continuing to firm, these supplies of SN500 continue to form the backbone of Group I exports from the Middle East Gulf. It is believed that prices have been moved upwards by around $5/t-$10/t, reflecting rising raw material costs. FOB prices for higher spec SN500 are now assessed at $615/t-$620/t. Mention should be made of other Iranian grades such as SN150 and SN650, which although produced in Iran, are not available for export at this time. The same is true of bright stock, which in fact is being imported to balance local demand.

Prices for Iranian SN500 imported to the U.A.E. and then re-exported has also increased and is offered around $625 FCA, or $640 FOB.

The upcoming holidays are not celebrated as much in the Middle East Gulf as in some other regions, but many expatriates from India, Pakistan, Iran and Europe look to visit home during this period. Some take a month for vacation so that business in this region also slows.

Offers for Group I cargoes from Brazil and the U.S. are heard at $588/t, basis CIF, for SN500 and $592/t for SN600. Bright stock has been offered at $825/t, CIF, in large volumes, although one offer from the U.S. East Coast was withdrawn in favor of delivering into West Africa. European and Red Sea material is expected to be delivered at around $595/t for SN150, $655/t for SN500, and $895/t for high spec bright stock.

With another large parcel of around 7,000 tons to 8,000 tons being assembled for the Indian market, Group III exports from Al Ruwais continue to expand into new territories. FOB levels for 4 cSt and 6 cSt grades are estimated on a netback basis at around $545/t, with 8 cSt material being loaded at $495/t.

Group II base stocks into Middle East Gulf are the subject of very limited reporting this week because so many individuals are on vacation. With source increases in the pipeline, it should be acknowledged that prices contained in new offers are probably higher than those reported here for the Middle East Gulf. Prices for large cargoes of Group II are $505/t-$525/t for 100N through 220N and $660/t-$675/t for 500N and 600N, CIF Middle East Gulf. Prices for heavy grades are due to be hiked perhaps as much as $20/t-$30/t, with lighter grades climbing an estimated $10/t-$15/t.

Africa

Regular trading patterns have now formed between Mediterranean supply points and receivers based in Morocco, Tunisia, Algeria and Egypt. While no new cargoes were reported this week, buyers in Mohammedia, Morocco, are looking for contract supplies of Group I products for next year and have investigated a number of sources in Italy and Spain as possible guaranteed sources of at least 70 percent of their needs. The balance could be imported from places such as Northwestern Europe or Greece. Traders are also keen to address this new demand and have offered stocks out of U.S. supply hubs and the Baltic Sea.

Specification is crucial for some of the demand, which may rule out Baltic barrels, but other parties have confirmed that they can accept Russian export qualities.

News from Nigeria includes the January delivery of a cargo of around 15,000 tons of multiple Group I grades, fixed from Paulsboro, New Jersey, on the U.S. East Coast and believed to contain mostly bright stock. This is the U.S. material offered into Nigeria a month ago and at one point reassigned to India and the U.A.E. Traders involved with this cargo may have had options to take it to various destinations, allowing them choose their best option.

Only one large cargo is being considered ex-Baltic, although two other parties are looking at shipments that would load in early January in Baltic and Northwestern European ports. Another cargo has been loaded FOB out of the U.K. for Lagos with 5,000 tons of mixed Group I grades that will have been sold to traders for CIF sale to Nigerian receivers in Apapa.

Prices for these cargoes differ since the receiving party in the former case may be linked to the trader delivering the parcel, while the end users in the other case are buying at arms length on a CFR/CIF basis.

Prices for the above Group I material landed into Apapa are assessed as $625/t in for SN150. SN500 is estimated at $675/t-$698/t and bright stock landed in large quantities at $915/t-$930/t. Other offers for Baltic grades will be around $645/t for SN150, $680/t for SN500 and $825/t for SN900, basis CFR/CIF Apapa

As previously for SN150, SN500 and SN900 delivered in flexitanks ex-Baltic Sea are offered at $795/t, $820/t and $945/t, CIF Apapa.

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