The Group II situation is different, with offers from major players still rocking the market within Europe where values have fallen fast. Availability is more than adequate, and the uptake of these oils is advancing now that the delta between them and Group I is much narrowed.

Group III prices remain under pressure from suppliers defending market share – which were difficult enough to establish in the first place.

Crude oil costs dipped over the past few days, and dated deliveries of Brent were at $69.20 per barrel for July settlement yesterday, down some $2.50 for the week. West Texas Intermediate crude slid to $58.45/bbl, also for July front month. ICE LS gas oil retreated to $615 per metric ton for June front month, around $30 lower than a week ago. These prices were obtained from ICE London trading late Monday.

Europe

Prices for Group I exports from Europe are unchanged this week and show no evidence of further erosion. Prices are stable although some offers contain higher numbers that have not been accepted. Solvent neutral 150 is priced between $550/t and $575/t, SN500 at $575/t-$600/t, and bright stock has flattened at $700/t-$740/t.

These levels refer to large cargo-sized parcels of Group I sold on an FOB basis ex mainland European supply points, always subject to availability.

Prices for Group I sales within Europe are also stable, with sellers aiming to move substantial volumes over the next month before the summer vacation season kicks in. There are rumors of some sellers offering fixed monthly prices for June, but at higher levels than most current ex tank spot prices.

Availability of all Group I grades is reportedly good with few areas or regions experiencing shortfalls. With export demand starting to rise, pressure seems to be easing on suppliers to make concessions to regional buyers of smaller quantities.

The differential between domestic and export pricing is maintained with the former 65/t-90/t higher.

As declared above, Group II prices are still coming under pressure and are reported lower than one week ago. Some suppliers suggested values may start to rise in June, but ample supplies of both light- and heavy-viscosity grades argues against it. More European blenders are showing interest in Group II, and it must only be a matter of time before the market takes up substantial quantities.

Prices dropped again, with FCA levels for 100 neutral, 150N and 220N now at $730/t-$840/t (645/t-745) and 500N and 600N at $760/t-$880/t (670/t-780). Ranges are unusually wide at the moment due to a resurgence of low-priced imports..

Group III prices dropped this week due to an abundance of offers and availability of grades with full slates of finished lubricant approvals as well as oils with only partial slates. Certain suppliers of fully approved Group IIIs continue to heavily discount in particular circumstances, perhaps looking to stave off any chance of losing sales to lower priced competitors. An announcement that Neste plans to increase production at its Porvoo, Finland, plant suggests supply could increase further.

Prices for partly-approved Group III fell to 665/t-710/t for 4 centiStoke grades and 675/t-720/t for 6 and 8 cSt, basis FCA Northwestern Europe. Values for fully-approved grades decreased to 710/t-840/t for 4 cSt, 800/t-865/t for 6 cSt and 775/t-835/t for 8 cSt, basis FCA Antwerp-Rotterdam-Amsterdam.

The levels above do not include prices for material which can be delivered in larger bulk cargoes to major buyers or distributors. Prices for those trades may be around the lower ends of the ranges referring to FCA levels above.

Baltic and Black Seas

Activity in the Baltic remains subdued for a number of reasons, not least of which is that supplies are not so forthcoming ex Russian refineries as they were some months back due to maintenance and strong domestic demand. There are still the remnants of issues with crude supplies.

Prices are depressed to the extent that purchasing CPT border can be too low for sellers to consider, leaving the Baltic market in limbo. However the Nigerian parcel recognized and identified over the past few weeks has now been confirmed, and a vessel will load this week with around 11,000 tons of product from a Baltic port.

Prices are maintained $475/t-$500/t for SN150, $485/t-$520/t for SN500 and $700/t-$725/t for Polish bright stock, all on an FOB basis.

Black Sea trade into Turkey from Russian suppliers has bounced back, possibly due to the extraordinarily low prices emanating from these sources, and this trade includes a couple of cargoes of 3,000 tons each moving into Marmara ports. The uncertainty and economic downturn continues to bear a heavy weight on base oil markets within Turkey, with local prices from Izmir refinery stabilized this week, and are maintained at previous levels.

Mediterranean offers for Group I base oils CIF Marmara ports are heard at $565/t for SN150 and $580/t for quantities of SN500. Bright stock is also under offer and is indicated at $775/t CIF. One cargo has moved from Greek sources to Derince with prices close to those indicated, while another parcel of some 5,000 tons from the Mediterranean also programmed to be imported into Gebze, Turkey.

Reports of STS activity at Kavkaz, Russia, describe another large cargo of around 10,000 tons likely to load in early June for the same receivers in the West Coast of India. Prices for these supplies are not confirmed, but offered prices CIF the West Coast of India were heard at around $545/t-$555/t for SN500. Indication prices i or SN900 were also heard at around $625/t.

Group III supplies are also being contemplated from Russian sources in addition to United Arab Emirates and Mediterranean suppliers.

Middle East Gulf

Red Sea sources describe the usual raft of cargoes moving out of Yanbual Bahr and Jeddah, Saudi Arabia, but supplies to Dar-es-Salaam, Tanzania, and Turkey are also being considered for Group I and possibly Group II base oils. Group III continues to be reported as moving from South Korea into Yanbu.

Another week of Ramadan remains, although many players in Middle East Gulf markets have commented that trading is largely unaffected by the daily routine observed during the Holy Month. Iranian sources maintain that exports of base oils are continuing, although there is scant evidence since no base oil cargoes are reported coming out of Iranian ports.

Receivers in the United Arab Emirates said they are continuing to assess a large parcel of Russian grades loading ex Kavkaz, Russia, in the Black Sea, this following the large 15,000 ton cargo already delivered. Sources have maintained that that prices CIF U.A.E. are to be around $555/t for SN150 and $565/t for SN500. SN900 is indicated at $625/t.

Notional prices for Group III base oils ex Al Ruwais, U.A.E., and Sitra, Bahrain, dipped this week due to these after review of transactions for cargoes moving into Europe and the U.S. FOB numbers are now assessed between $685/t-$725/t for 4, 6 and 8 cSt oils. Eight cSt grades going into India and the Far East will be around $100/t less due to local selling prices.

Nexbase Group III base oils from Sitra marketed by Neste, which hold a full slate of European OEM approvals, also decreased an are now at $845/t-$875/t for 4, 6 and 8 cSt grades delivered into European and U.S. markets. Nominal FOB netbacks are based on prices extracted from regional selling levels, less marketing, handling and freight costs.

Producers have said they would like to raise prices in some markets, but this appears highly unlikely given reports of increased competition and aggressive selling in many areas.

Prices for Group II imports from the Far East and the U.S., for oils with full slates of approvals sold FCA ex U.A.E. hub storage, decreased to $855/t-$895/t for 100N, 150N and 220N, while 500N and 600N are at $865/t-$910/t.

Africa

Mediterranean markets supplying North African receivers report more cargoes going into Egypt and Morocco. Sources confirmed that EGPC will not execute the option to take an additional cargo of 3,000 tons of bright stock. The market awaits the issuance of a new tender, which may come out after the end of Ramadan.

West African reports contain news of the cargo loading out of the Baltic for receivers in Apapa, Nigeria. The 11,000 ton is loading this week and is due to arrive in Nigeria around early July. There have been no announcements made of additional cargoes to be loaded out of the U.S. Gulf, which tends to be the source for rival traders. The cargo noted last week, which was loaded out of Singapore, is rumored to contain Group I and Group II grades. Some 10,000 tons in total was loaded, and more information is being sought, but it is surmised that the same party loading the current Baltic parcel may be involved in this unusual shipment.

Group I prices into Nigeria pertaining to all cargoes which have been loaded, or are loading from the Baltic and Livorno, Italy, are unchanged at $670/t-$680/t for SN150. SN500 is established at $680/t-$690/t and bright stock at $885/t-$925/t. SN900 as an indication only is reckoned at $695/t-$720/t. All prices are on the basis of CIF/CFR Lagos, Nigeria.

The prices above refer to large cargoes of at least 10,000 tons landed into Nigerian ports such as Apapa, Lagos.

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