Crude and feedstock values strengthened the past few days, with dated deliveries of Brent crude rising to $81.00 per barrel for November front month, a new recent high, while West Texas Intermediate crude has broken through the $70 barrier to post at $72.30/bbl, now also for November settlement. ICE LS Gas Oil rose to $704 per metric ton for October front month. These prices were established from London ICE trading late yesterday.

Europe

European API Group I export prices remain unchanged at this time, although some players believe they face upward pressure due to crude costs. Light solvent neutrals are priced between $720/t and $740/t, while SN500 and SN600 are at $795/t-$820/t and bright stock in a wide range at $865/t-$895/t. These prices refer to large cargo-sized parcels of Group I base oils sold on an FOB basis ex mainland European supply points, always subject to availability.

Group I prices for sales within Europe were also flat this week though crude was again said to be exerting upward pressure as values for October sales are prepared. This represents a turnaround from last week base oil prices seemed more likely to soften.

The differential between prices within the region and export numbers is maintained this week at 70/t-90/t.

Group II pricing normally responds quickly to rises in crude and feedstock levels, with importers applying adjustments in source markets that then filter down to overseas areas. This is especially true during times like now when demand is growing. Prices in Europe remain stable this week, but sellers and buyers recognize that there is upward pressure.

FCA and truck- or barge-delivered prices are at $875/t-$920/t (745/t-785) for light-viscosity neutrals and $955/t-$975/t (815/t-820) for 500N and 600N.

In the Group III camp, FCA values for oils with partial slates of finished product approvals are maintained, with no news that increases would be levied from Oct. 1. Four cSt oils are at 765/t-770/t ($885/t-$895 ), 6 cSt at 775/t-780/t ($900/t-$910) and 8 cSt at 785/t-790/t ($910/t-$920).

Group III stocks carrying full slates of approvals are priced higher, at 795/t-810/t for 4 cSt, 800/t-820/t for 6 cSt and 810/t-825/t for 8 cSt, all on an FCA basis Antwerp-Rotterdam-Amsterdam.

These prices are based on smaller lots sold ex rack or delivered by truck and do not reflect prices for material delivered in bulk cargoes to larger users, which may cost considerably less.

Baltic and Black Seaas

Baltic reports this week indicated that a second large inquiry for Nigeria described last week has been covered but that shipping fixtures have not yet been noted. It is anticipated that the cargo will consist of around 12,000 tons, but the breakdown of quantities to be loaded out of the Baltic is not yet confirmed. Routine cargoes moving into Antwerp-Rotterdam-Amsterdam and the east coast of the United Kingdom make up the trades for this week, and another inquiry has been posted for a large quantity of Russian export base oils to be loaded ex Baltic for Far Eastern receivers, perhaps similar to a cargo reported last week.

Strangely, FOB prices appear to have dipped, although this pertains to a Nigerian cargo that was previously negotiated at that is currently loading. Here, too, pressure is pushing up on prices for deals now being negotiated. For this week, SN150 remains at $680/t-$700/t, SN500at $755/t-$775/t, SN900 at $795/t and bright stock with viscosity index of at least 90 ex southern Baltic around $840/t-$855/t FOB.

Black Sea reports describe cargoes moving into Turkish ports from Mediterranean sources light solvent neutrals priced at $755/t-$765/t and SN600 or SN500 at $825/t-$845/t, all on a CIF basis.

After the reports from Kavkaz, Russia, of the latest Singapore parcel, another large loading is rumored to be in the offing for first half October. Destination for this parcel has not been revealed, although one source suggested it may go into the United Arab Emirates. Previous prices may have been in the region of $725/t-$735/t, very aggressive for quantities of SN500.

Middle East Gulf

Red Sea reports describe material moving out of Yanbual Bahr and Jeddah, Saudi Arabia, to the West Coast of India. The inquiry for material to move into Durres in Albania appears to have disappeared off the radar, perhaps suggesting it was flaky.

Middle East Gulf Group I trades show no evidence of Iranian availabilities, which may reflect the material being required in the domestic market within Iran or be an early effect of impending U.S. sanctions limiting the shipping opportunities to move cargoes from southern Iranian ports.

A Black Sea cargo ex Kavkaz moving into the U.A.E. may make sense at this time since the lack of Iranian supplies may create a shortage of lower cost Group I in the region. Inquiries have been placed with suppliers on the Gulf and Easat coasts of the United States, but there are no records yet of any meaningful offers from there. Mediterranean sellers of Group I oils said they, too, have been contacted by Middle East Gulf buyers.

Most of the base oil traffic out of the Middle East Gulf is exports of Group III from Al Ruwais, U.A.E., and Sitra, Bahrain. FOB prices are maintained this week, although October prices face upward pressure. For now all viscosity grades of partially approved oils remain at $785/t-$810/t.

Fully approved Group III sold by Neste from Sitra is estimated to netback between $845/t-$875/t for 4, 6 and 8 cSt grades moving westwards to Europe, the U.S. and other American markets. Exports of 8 cSt to Far Eastern markets may show lower netback levels due to lower local selling prices.

The numbers above refer to FOB levels established on a notional netback basis using published freight rates, advised local selling prices, plus notifications of bulk CIF/CFR cargo prices from various sources.

Prices for Group II parcels sold on an FCA basis or delivered by truck or flexitanks have hardened this week with small increases being applied by distributors. It is not yet clear whether these price rises have been initiated by local distributors or whether supply sources implemented mark-ups at local hubs.

Prices for fully approved l00N, 150N and 220N are revised upwards to $1,020/t-$1,065/t, while 500N and 600N are at $1,095/t-$1,135/t.

Africa

South African shipping contacts reported two more large cargoes of mostly Group I moving out of Europe for an oil major operating in South Africa. Though designated as inter-affiliate transaction, these shipments are having a major effect on the South African market.

West Africa markets are looking for Group II base oils to be delivered into Nigeria. There are a few problems attached to these inquiries, one being the storage capability to accept Group II grades in place of existing Group I material, and another being that the prices being sought are below Group I levels! One source reasoned that because Group II stocks are not as heavy as buyers require that they should cost less than SN900 Group I and bright stock.

Another large Baltic cargo has been mooted by receivers in Lagos, although prices have yet to be agreed for this parcel and may not be as attractive as deals recently completed.

Prices into Apapa port in Lagos are therefore maintained this week for Group I base oils now being landed, with SN150 through SN180 assessed at $755/t-$785/t, SN500, SN600 and SN650 at $830/t-$855/t and bright stock indicated at $920/t-$940/t. SN900 ex Baltic, purely as an indication, is estimated to be landed into Nigeria at around $865/t-$895/t.

These prices are for large parcels in excess of 10,000 tons total of Group I base oils delivered on a CFR or CIF basis into Apapa port.

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