Group II levels are steady with few bids and offers for new business this week. Supplies of all grades appear ample to meet growing demand. There are tales around of Far East sources looking to bring more product into the European, Middle Eastern and African markets, including significant volumes of material being targeted into mainland Europe.

The Group III market seems balanced in the wake of brisk July trade, but that may not last because Middle East Gulf and Far East suppliers appear increasingly to be competing for business in the Eastern Hemisphere.

Petroleum weakened during the past few days as dated deliveries of Brent crude fell back below $60 at $59.75 per barrel, now for October settlement. West Texas Intermediate slackened to $54.70/bbl, still for September front month. ICE LS gas oil dropped around $30 to $560 per metric ton for August front month. These prices were obtained from London ICE trading late Monday.

Europe

Prices for Group I exports within Europe are stable amid scant trading, allowing for the minor tweaks mentioned above. There are still generous availabilities of bright stock and not many options for export destinations to supply.

Prices for SN150 remain between $575 per ton and $598/t, while SN500 is at $580/t-$605/t and bright stock at $685/t-$7710/t. These prices apply to large cargo-sized parcels of Group I sold on an FOB basis ex mainland European supply points, always subject to availability.

Trading within Europe is very quiet and could remain so even into September since many blenders stocked up inventories during June and July. The differential between intra-regional and export pricing is unchanged at 55/t-85/t lower for exports.

Prices for Group II base oils have steadied. Market sources report ample availabilities. Debate continues in the European Commission about whether to renew the duty waiver on Group II imports , and officials are now discussing the possibility of implementing quotas. With August and holidays in full swing, nothing will be announced until the second half of September.

European Group II prices are unchanged at $720/t-$815/t (640/t-730) for 100N, 150N and 220N and $750/t-$825/t (665/t-740) for 500N and 600N. These prices pertain to all Group II base oils, those offered by oil majors with full slates of finished lubricant approvals and small imported parcels delivered in flexitanks.

The pressure is off Group III prices this month with low seasonal demand taking over. Values for oils with partial slates of approvals are assessed at 665/t-710/t for 4 centiStoke and 675/t-720/t for 6 and 8 cSt, all on an FCA basis ex hubs in Northwestern Europe.

Prices for fully-approved grades are unchanged, too, still in a wide band at 710/t-840/t for 4 cSt, 800/t-865/t for 6 cSt and 775/t-835/t for 8 cSt, FCA Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

Baltic trade continues to be depressed as Russian supplies that had been shipped from this region move either into the domestic market or other destinations such as Ukraine and former Soviet Union states. More Russian exports are passing through the Black Sea now. Values for the scant amount of trades that are occuring in the Baltic are unchanged at $475/t-$500/t for SN150 and $485/t-$520/t for SN500, basis FOB. Polish bright stock is also unchanged at $685/t-$710/t, FOB Gdansk.

Black Sea activity is getting a boost from the Russian exports being channeled through the STS facility at Kavkaz, Russia. There are reports this week of a number of cargoes loading for discharge into Turkey and a larger parcel of 11,000 tons loaded for the West Coast of India. There is also an inquiry for 5,000 tons of material to go to Antwerp-Rotterdam-Amsterdam and additional cargoes are being suggested for Singapore and India.

STS prices at Kavkaz remain low at $464/t for SN500 and $447/t for SN150, below European vacuum gas oil levels.

Turkish markets remain dull, with demand still at its lowest for some years. There are some parcels of Group I moving from Kavkaz and also from Mediterranean sources although these are few and far between. This month will be even quieter than usual due to the holidays. Offers of base oils from the local Izmir refinery are still percolating around the markets

Greek sources continue to offer to Turkish receivers, and Group I sales from the Mediterranean were reported last week at $590/t for SN150 and $585/t for SN500, basis CIF Turkish locations. SN600 is offered at $598/t, and bright stock is still indicated at $765/t, CIF.

Group II and Group III base oils continue to be offered from the Far East in flexies, these supplies being sold as an alternative to material available ex tank from appointed distributors.

Middle East Gulf

The one area which apparently has not taken holidays appears to be the Red Sea region. A number of large cargoes are loading out of Yanbual Bahr and Jeddah, Saudi Arabia, for destinations in India, the Middle East Gulf and the Far East. Over 50,000 tons of Group I and Group II base stocks may be loaded out of Saudi Arabia during August, and another Group II cargo is being considered for a trans-Suez voyage going into either Greece or a northwestern Italian port.

In the Middle East Gulf, the row between the United Kingdom and the United States against Iran escalated on the news that Iran seized another tanker, this time an Iraqi-flagged vessel carrying a small 600-ton cargo of gas oil. The previous arrest of an Iranian tanker in Gibraltar by U.K. authorities will not be used to swap vessels for the detained British ship, since the U.K. is maintaining that the Gibraltar tanker was in breach of EU sanctions regarding the supply of crude to Syria.

Indian receivers confirmed that they are unable to access Group I base oils from sources in Iran and that availability Group I re-exported from the United Arab Emirates is patchy at best. This is material taken out of Iran in small local tankers and discharged into tanks in ports such as Sharjah. Base oil exports are not reported through normal channels, although U.A.E. sources claim prices for premium SN500 have declined to around $575/t, or equivalent value in U.A.E. dirhams.

More offers for Russian exports ex Kavkaz are being aimed at receivers in India and the U.A.E. This material is possibly being used as a substitute for Iranian Group I that is no longer easily available. Prices remain around $542/t for SN150 and $557/t for SN500.

Group III continues to be shipped from Al Ruwais, U.A.E., with a 6,000-ton cargo to be loaded promptly for distributors in China. Values for partly approved Group III base oils loading out of Al Ruwais and Sitra, Bahrain, are unchanged at $685/t-$725/t for all three viscosity grades. Eight cSt grades moving to India and China will achieve lower contribution levels due to lower local selling prices. These prices are in respect of partly-approved base oils being sold by Adnoc and Bapco.

Nexbase-branded Group III oils marketed from Sitra by Neste, which carry a full slate of approvals, should attract higher netback levels due to higher selling prices in destination markets such as U.S. and Europe. Lately these prices have been the subject of heavy discounting in Europe, taking selling levels close to those of the partly-approved range of Group III base oils. Notional netback levels remain unchanged at $700/t-$865/t for 4, 6 and 8 cSt grades delivered into European and U.S. markets.

Nominal FOB prices on a netback basis are based on values derived from regional sales less marketing, handling and freight costs.

Group II base oil prices within Middle East Gulf regional markets remain unchanged this week at $775/t-$880/t for 100N, 150N and 220N, while 500N and 600N are at $785/t-$900/t, all on an FCA basis ex supply hubs in the U.A.E.

Africa

South African receivers continue to issue inquiries for the supply of Group I base oils to be imported into Durban during August or September. The delayed re-start of the local refinery is due to commence this week. Additional cargoes to load from Rotterdam, the U.K. and a supply hub in the Mediterranean are due to arrive into Durban during September. According to shipping sources in Durban, several parcels ranging from 6,000 to 12,000 tons will carry Group l, Group II and Group III grades.

Mediterranean supplies to North Africa feature highly again this week, with a number of parcels of Group I and Group III base oils moving to Morocco, Israel and Algeria. In addition to these cargoes, one Egyptian cargo of bright stock has already loaded under the third quarter supply contract and will be followed by two more cargoes of the same grade for delivery during second half August.

In West Africa there is news of a new receiving point for base oil cargoes: A parcel of some 3,000 tons is being considered for Port Gentil in Gabon. The supply may come from southern Spain.

The large 15,000-ton cargo of Group I grades out of the U.S. East Coact is on the high seas en route to Nigeria

News from the Baltic is barren, with no information of loadings planned out of that region. It is rumored that a cargo of around 12,000 tons may be assembled from the Black Sea ex Kavkaz, but this has yet to be confirmed, and with traders missing from their desks for the next couple of weeks, this may not happen until nearer the end of the month.

Prices for Group I base oils discharging into Apapa, Nigeria, are unchanged at $685/t-$710/t for SN150, $695/t-$720/t for SN500 and $885/t-$925/t for bright stock. SN900 is indicated at $710/t-$720/t.

The spreads and price ranges cover all specifications of base oils including SN150 and SN500 sales requiring a guaranteed viscosity index of at least 95. All prices are basis CIF/CFR, Apapa, Lagos, and refer to large cargoes of at least 10,000 tons.

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