Fundamentals remain stable this week, with crude and feedstocks seemingly finding a new norm in terms of price levels, with trading taking place within a narrow range. Dated deliveries of Brent crude remain around $63.50 per barrel, only $1 higher than last week’s posting. With both dated deliveries of Brent crude and West Texas Intermediate crude showing front month as January, the latter has also been relatively stable and is now at $57.80/bbl, recording a similar small upward swing as dated Brent. ICE LS Gas Oil levels are marginally higher than last week at $566 per metric ton, still for December front month settlement.

Focus remains on a crucial OPEC meeting scheduled for Thursday, where Russia is said to be negotiating hard before committing to extending its supply quota deal with the cartel. Crude may drift lower as traders are getting nervous about the announcement that is due from OPEC on Thursday. The market expects an extension to the co-ordinated production cut, as long as the end of 2018. Russia and OPEC have agreed to curb until the end of March, but now there is talk that Russia wont agree to an extension beyond that date.

Europe

Group I exports out of Europe have FOB prices pegged around the same levels as last week, with light solvent neutral grades remaining between $695/t and $730/t. SN500 and SN600 are also unchanged following upward tweaks the previous couple of weeks and are at $775/t-$795/t. Bright stock offers vary from one supplier to another but remain at $845/t-$870/t. Prices around both ends of this spectrum have been heard in offers made during the past few days.

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

Prices for sales within Europe are also unchanged this week, but buyers offer different predictions of what may happen after Dec. 1, when values come up for review. Some have already been advised that markups will be implemented to take account feedstock cost hikes that occurred during November. Others believe base oil prices may be cut in an effort to reduce inventories. Both scenarios may occur as different may follow different strategies.

The differential between FCA prices and spot export levels is assessed at 50/t-70/t.

After slight adjustments the past couple weeks, European Group II prices appear stable. Demand appears healthy, with more blenders replacing Group I. Formulations for passenger car and heavy-duty motor oil formulations now require the use of Group II.

Light-viscosity Group II grades remain at $680/t-$695/t and 500N and 600N at $775/t-$815/t. These nominal imported prices are for large bulk cargoes being landed CIF into Antwerp-Rotterdam-Amsterdam. FCA or locally delivered prices are around 770/t-800/t for light-vis oils and 850/t-885/t for heavier grades.

European Group III prices are also stable to firm, the latter term applying to situations where distributors are trying to achieve hikes as opposed to refiners supplying bulk cargoes into hub storage. Values for 4 centiStoke and 6 cSt grades landed into Northwestern Europe bulk storage are $785/t-$825/t on a CIF basis, while local euro FCA sales are 695/t-720/t. Grades carrying full slates of finished lubricant approvals are at 790/t-825/t for 4 and 6 cSt material and 765/t-785/t for 8 cSt, basis FCA Antwerp-Rotterdam-Amsterdam.

These prices refer to ex-rack sales or truck delivered quantities, not large bulk cargoes delivered to majors and distributors, which may be $65/t-$90/t lower.

Baltic and Black Seas

Reports from the Baltic indicate a couple very large parcels of Russian export grades have been almost finalised for delivery into Nigeria. These cargoes will load during the second half of December and be designated as in transit on Dec. 31, which is ideal for accounting purposes. Other smaller parcels are being organized for delivery into Antwerp-Rotterdam-Amsterdam and the east coast ofthe United Kingdom, although these cargoes will probably be discharged prior to New Year. Prices for the large parcels have not been disclosed. It is possible that discounts have been negotiated, although one cargo is being sold on a CIF/CFR basis and the seller in that case maintains that the offered value was within current West Africa pricing spreads. Netback calculations place these prices within the ranges indicated below.

FOB prices are unchanged at $700/t-$740/t for SN150, $745/t-$760/t for SN500, $795/t-$820/t for SN900 and $885/t-$940/t for bright stock.

Cross Black Sea trade includes a number of parcels of what is considered to be Russian export SN500 and smaller quantities of SN150 moving out of Azov, Russia, loadports to Turkish receivers. These movements are said to be delivered into Gebze, Turkey, at around $787/t, basis CIF, which is lower than last reported. The large cargo loading on an STS basis at Kavkaz, Russia, has still not been fixed firm, although sources close to this trade said operations will commence any day now.

Mediterranean cargoes out of Greece are once again the focus of imports going into Derince, Turkey, and are priced at around the same levels as previously noted, $765/t-$775/t for light solvent neutrals $810/t-$825/t for SN600, CIF. Four and 6 cSt Group III are reported at $820/t-$835/t, delivered CIF into Gebze and Aliaga, Turkey.

The market still awaits confirmation of Group II exports flow from Yanbual Bahr, Saudi Arabia, where Luberef is expanding and upgrading one of its Group I plants. A number of Group I cargoes are understood to be loading out of this site and the other Luberef plant in Jeddah, Saudi Arabia.

Middle East Gulf

Middle East Gulf sources report brisk activity for base stocks shipments into and out of the region. Iranian exports are once again to the forefront of Group I material moving out of Bandar-e Emam Khomeyni, Bandar Bushehr and Bandar Abbas, Iran, to Pakistan and of course to the West Coast of India. Premium Iranian SN500 is priced as last reported, with FOB levels for this Sepahan Oil product at around $785/t FOB. There have been rumors of another Black Sea cargo of Group I grades coming into the United Arab Emirates, but no confirmation of this movement could be gleaned from local sources this week.

There were also talks regarding a cargo of Group I grades sourced ex-U.S. Gulf Coast. This cargo was originally allocated to receivers in West Africa, but for some reason it has now been offered delivered into U.A.E.. Prices are not disclosed, nor is the grade composition of this parcel, but it probably includes heavy-vis stocks.

FOB values for 4 and 6 cSt Group III loading out of Al Ruwais, U.A.E., are now assessed at $710/t-$740/t. Group III oils exported from Sitra, Bahrain, with finished lube approvals will be priced higher.

Group II offers from Far East suppliers have been heard at $685/t-$695/t for light-vis grades and at $855/t-$875/t for 500N and 600N, CIF Middle East Gulf. Shipments of these grades often discharge in two or three ports including the West Coast of India.

Prices for local U.A.E. availabilities of Group II base oils on an FCA or delivered basis are around $820/t-$895/t for 100N, 150N and 220N, with 500N/600N at $875/t-$945/t, all on a delivered basis. Prices vary depending on distances, quantities and method of shipment.

Africa

South African agents report another that Northwestern European cargo of Group I base oils plus drilling fluids will come into Durban during January or early February. This now appears to be a regular supply stream, with 10,000 to 12,000 tons of material being discharged from each voyage.

One distributor in South Africa reports local Group I prices much higher than other markets: $900/t-$950/t for SN150 and SN500 of reasonable quality and nearly $1,100/t for bright stock. Confirmation of these levels is being sought, but rates in South Africa do include substantial import duties and local taxes.

West Africa ports from Guinea to Nigeria will be receiving a large number of vessels discharging base oils from the Baltic, mainland Europe, the Mediterranean and the U.S. Gulf Coast. It is possible that more than 60,000 tons of base oils will arrive early in the New Year. It remains to be seen whether Group I availability in West Africa improves in a sustained way, since some suppliers are keen to reduce inventories at this time of year and replenish them after January.

The suggestions that Group I markets were tight appears to have been largely unfounded since almost all potential sources are being tapped for this rash of imports by West Africa buyers.

Prices for Group I grades being delivered into Apapa, Nigeria, are established through current offers made by suppliers on a CFR/ CIF basis and are not far off those reported last week from European and Baltic suppliers. SN150 delivered into Nigeria is now assessed at $895/t-$920/t, SN500 at $925/t-$955/t and SN900 at $995/t-$1,020/t. Bright stock in two offers has been noted at $1,035/t and $1,048/t.

The prices above refer to quantities of Group I delivered CIF/CFR to Apapa, Lagos, in parcels of at least 6,000 tons total.

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