Dated deliveries of Brent crude posted yesterday at $71.85 per barrel for September front month, some $7 lower than last week, while West Texas Intermediate crude slipped below the $70 barrier, to $67.95 per barrel for August settlement. ICE LS gas oil trended similarly, falling around $45 per metric ton to $630/t, now for August settlement. These prices are based on ICE London trades late yesterday.

Europe
API Group I export prices were flat throughout Europe this week. Demand was relatively low because of the typical summer slowdown in finished lubricant production. There is some interest from the broader export markets, but regional buyers do not appear in a hurry to pursue trades.

Prices for light solvent neutrals remain between $785/t and $810/t, while heavier grades are at $885/t-$925/t and bright stock is $945/t-$965/t. These values pertain to large cargo-sized parcels of Group I sold on an FOB basis ex mainland European supply points.

Group I sales within Europe are basically marking time, with off-take down to minimal levels. Sellers are making only contracted deliveries and report that business is lackluster. Some traders and resellers are using the time to restock inventories, preparing for September, when they expect that business will return to normal. There have been no reports of price movements in July, and there are few indications that they will be reviewed at the end of the month.

The differential between intra-regional prices and exports is still assessed at 50/t-75/t.

Group II prices are flat with no movement in either direction, although some buyers are suggesting that the drop in crude and feedstock values should be passed on to base oils. They noted that producers are very quick to impose markups on base oils when crude is rising. Sellers argued it is too soon to react because crude could rise again.

FCA and delivered prices are stable and remain at $875/t-$920/t (745/t-785) for light-viscosity grades 70 neutral through 220N and $955/t-$975/t (815/t-820) for 500N and 600N.

Group III base oils are showing signs of strength, and some sellers say demand has caught up to supply to eliminate a years-long glut. Production figures suggest the segment is still over-supplied, though the amount is decreasing.

FCA prices are tweaked ever so slightly higher this week, as oils with partial slates of finished lubricant approvals are now 775/t-790/t for 4 centiStoke grades, 795/t-815/t for 6 cSt and 795/t-805/t for 8 cSt. Group III oils with full slates of ACEA and European OEM approvals are assessed at 805/t-830/t for the 4 cSt, 825/t-850/t for 6 cSt and 830/t-855/t for 8 cSt, all on the basis of FCA sales Antwerp-Rotterdam-Amsterdam.

All of the above Group III prices are based on ex-rack or truck delivered smaller lots of Group III base oils, and do not reflect prices for material delivered in bulk cargoes to larger users such as major blenders or additive manufacturers, which may pay considerably less.

Baltic and Black Seas
Baltic reports show a number of cargoes moving to regular receivers in Antwerp-Rotterdam-Amsterdam and the United Kingdom, where resellers and traders are re-stocking tank inventories. Some buyers anticipated that prices would rise in the Baltic, and wanted to be ahead of the game. This doesnt appear to have happened, nor does it look likely in the near future, given the crude and feedstock scenario. A number of large inquiries are being negotiated for Nigerian receivers.

An unusual 6,000 ton cargo identified last week as coming out of the United States East Coast and going into the Baltic has been confirmed. The assumption is that this cargo may consist of bright stock, which can either be imported into local markets or re-exported as part of a larger cargo to West Africa, for example. This may be a first for a cargo of base oils to be moving into the Baltic from a source which would normally rank as a destination.

Prices are reported to be slightly weaker this week, with FOB levels for SN150 at $730/t-$765/t and SN500 at $830/t-$850/t. SN900 however is unchanged at $855/t-$870/t, and bright stock is $825/t-$895/t, depending on quality, source and loadport.

In the Black Sea, sources described an offer to load 3,000 tons of base oil ex Kavkaz, Russia, to go into Mohammedia, Morocco. Larger cargoes are reportedly still in the cards ex STS Kavkaz, but details are lacking. There are some problems with draft on the Russian river system, but thunderstorms may have alleviated this problem, at least in the short term.

Mediterranean oils are again moving into Turkish ports, albeit in smaller quantities than previously noted. Greek and Italian sources are being tapped, and prices are marginally lower at $785/t-$810/t for light neutrals and $880/t-$910/t for SN500 and SN600, all on a CIF basis.

Middle East Gulf
Red Sea activity this week is limited to shipments of both Group I and Group II base oils loading out of Yanbu and Jeddah primed for the West Coast of India. Sudanese receivers have not confirmed a previously reported cargo from Mediterranean sources.

A large cargo of 12,000 to 14,000 tons of Group I been loaded from Italian sources bound for the United Arab Emirates. The U.S. Gulf Coast cargoes being considered do not appear to have been completed, perhaps unable to meet the going rates of $825/t-$840/t CIF U.A.E. ports.

Another Iranian Group I cargo was confirmed coming out of Bandar Bushehr for receivers on the West Coast of India. Potential U.S. sanctions have not interfered in this supply, with Indian receivers more than comfortable to accept Iranian cargoes without any apparent concerns.

Premium Iranian SN500 is indicated at $825/t-$840/t delivered into Sharjah, U.A.E.

News inquiries indicate that volumes of Group III loading out of Al Ruwais, U.A.E., will exceed the figures released last week in this report and could exceed 80,000 tons for the month. This reflects peak production rates for this refinery, and should this rate continue, sellers may opt to cherry pick destinations and receivers where they can achieve the highest netbacks and greatest contributions.

Notional prices for partly approved oils are maintained this week at between $830/t-$860/t for all three main grades, basis FOB Al Ruwais. The same values apply to oils from Sitra, Bahrain, marketed by Bapco. Sitra oils marketed under the Nexbase brand, which do have full approvals, are estimated to netback higher at $865/t-$895/t.

These numbers refer to FOB levels established on a netback basis using published shipping freight rates and taking into account reported local selling prices, plus notifications of bulk CIF/CFR cargo prices from various sources.

Group II cargoes ex Yanbu alBahr, Saudi Arabia, do not appear to be making inroads on a large scale in Middle East Gulf. Destinations more easily serviced by land transportation may be benefitting from the new production, but regions such as the U.A.E. do not appear to be receiving shipments like those going to India.

More talks are heard regarding supplies from Yanbu making their way into European markets such as Turkey, where prices may be more attractive than U.A.E., India or the Far East. More information from potential receivers is being sought on this subject.

Prices for Group II base stocks either FCA, truck or flexi-tank delivered from U.A.E. sellers are maintained this week at $1,035/t-$1,070/t for light grades and $1,130/t-$1,175/t for 500N and 600N.

Africa
West Africa markets are subdued this week, as many players reported expecting prices set to drop during the latter part of this year – and therefore preferring to delay major purchases. All options are open at the moment for sources to supply Group I into Nigeria – the U.S. Gulf Coast, European mainland and the Baltic. Baltic sources again reconfirmed firm interest to supply two cargoes from that region.

Notional prices for Group I base oils into Nigeria are remain unchanged this week, still awaiting input from any of the cargoes yet to be confirmed. As indications only light neutrals such as SN150 or SN180 are assessed between $855/t-$880/t. SN500/600 between $955/t-$975/t with bright stock being priced between $975/t-$995/t. SN900 ex Baltic is estimated at around $935/t.

Quoted prices refer to large parcels of more than 5,000 tons of Group I base oils delivered CFR or CIF into Apapa port, Nigeria.

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