Base oil markets are exceptionally quiet this week as Christmas holidays permitted only a couple trading days in areas where it is observed. Many players were absent from their desks and prices were unchanged.

There was some good news in the continuing decline of crude oil prices, which widened base oil margins. Dated deliveries of Brent crude dipped to $52.20 per barrel for February front month, while West Texas Intermediate steadied around last weeks level at $45.20/bbl, also for February settlement. The ICE LS gas oil price fell below the $500 barrier and now stands at $497 per metric ton, for January front month.

The above prices were established from late ICE London trading on Dec. 28.

Europe

There were a few conversations the past week about January barrels, but most sources agreed it will take a week or longer to gain clarity about the direction of Group I markets for sales within Europe and exports from the region. Suffice to say that supply of the grade remains long and that refiners are looking for ways to prevent the market from moving further into oversupply. It should be noted that with current selling levels, the margins over production of alternate distillates remains healthy.

Prices for European Group I exports remain remain between $595/t and $620/t for light solvent neutrals and at $610/t-$625/t for SN500 and SN600. Bright stock prices remain at $800/t-$840/t. These prices are for large cargo-sized parcels of Group I offered on an FOB basis from mainland European supply points, always subject to availability.

Prices for Group I sales within the region were likewise unchanged, with few buyers and even fewer sellers in attendance this week. Those few contacted suggested that buyers are looking for lower prices into January, citing lack of demand, good availability and falling feedstock prices. This could set the stage for an interesting start to 2019.

The differential between domestic prices and export numbers also remains at 65/t-95/t, domestic levels being the higher of the two.

Group II prices remain stable, but this may reflect the absence of players in the market. This sector continues to show a resilience not seen with other grades. With European prices being still very attractive to sellers this market may be overdue for change, since with falling production costs there may be room for some adjustments.

FCA and truck- or barge-delivered prices are unchanged at $885/t-$930/t (785/t-825/t) for 100 neutral, 150N and 220N and $960/t-$1000/t (850/t-885) for 500N and 600N.

In the Group III segment, the difference between prices for oils with full and partial slates of finished lubricant approvals is not disappearing and appears to be a settled aspect of the market. Values for the latter remain at 740/t-760/t for 4 centiStoke grades, 760/t-780/t for 6 cSt and 780/t-800/t for 8 cSt, all on an FCA basis from Antwerp-Rotterdam-Amsterdam.

Group III oils with full slates of ACEA and European OEM engine oil approvals are still at 860/t-880/t for 4 cSt, 885/t-910/t for 6 cSt and 855/t-885/t for 8 cSt, basis FCA Antwerp-Rotterdam-Amsterdam.

These levels do not reflect prices for material delivered in bulk cargoes to large or major buyer, which may be lower.

Baltic and Black Seas

With few sources present to converse with this week there is little news from the Baltic markets, except that loadings of two large cargoes for West Africa are underway. Smaller cargoes have been moving to Antwerp-Rotterdam-Amsterdam, Scandinavia and the United Kingdom, enabling stocks Baltic storage to be drawn down before the years end.

In the absence of offers or completed deals, FOB prices are assumed to have remained stable at $580/t-$599/t for SN150, $585/t-$600/t for SN500 and $795/t-$820/t for bright stock.

A similar tale emits from Black Sea regions as Turkish buyers and markets were very quiet last week. There are still a few Mediterranean offers on the table, but possibly now out of validity, which can only be good news for buyers, since lower numbers may be expected for re-offers in the new year. Offered prices for European Mediterranean Group I base oils face downward pressure but so far are unchanged at $605/t-$620/t for SN150 and $610/t-$625/t for SN500 and SN600.

There are no reports of activity from the STS operation in Kavkaz, Russia, and little or no news on Russian prices for January arrival into Turkey.

Middle East Gulf

There are reports of more shipping inquiries for cargoes from Yanbual Bahr and Jeddah, Saudi Arabia, but otherwise this region is quiet. Operationally, trade out of this region continues unabated for locations such as the United Arab Emirates and the West Coast of India. Activity in the Middle East Gulf regions has also dipped as a result of the seasonal holidays being taken throughout Europe, the Middle East and Africa.

U.S. sanctions are certainly affecting exports from Iranian ports.

As an export region, the Middle East Gulf continues to show cargoes of Group III announced now for January loading out of Al Ruwais, U.A.E., and Sitra, Bahrain.

Netback values for these exports remain unchanged at $825/t-$860/t for 4, 6 and 8 cSt grades with partial sets of approvals. Base oils carrying full European approvals from Sitra refiner are assessed at $915/t-$945/t for the same grades moving to European, U.S. and other Western markets. The 8 cSt grade shows lower netback results for trades eastward due to selling prices in those markets being around $150/t less.

These prices refer to notional FOB levels established on a netback basis using published freight rates, local selling prices and additional notifications of bulk CIF/CFR cargo prices from various sources.

Fully approved API Group II base oils ex hub storage in the U.A.E., on an FCA basis or delivered by truck or flexitanks, are estimated at $1,085/t-$1,030/t for 100N, 150N and 220N and $1,155/t-$1,195/t for SN500 and SN600, unchanged from last week. These prices refer to small quantities delivered around the Middle East Gulf. Prices may vary with destination and distance from hub supplies.

Africa

West Africa is perhaps the only region where there is some evidence of prices moving the past week. Given the two Baltic cargoes identified over the past few weeks, it seems prudent to assume slightly lower CIF/CFR numbers into Nigeria: $720/t-$750/t for SN150 through SN180, $750/t-$785/t for SN500, SN600 and SN650 and $920/t-$955/t for bright stock. SN900 remains as an indication at $815/t-$845/t, basis CIF/CFR.

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