Some players around Northwestern Europe have expressed frustrations at the effects of the strike at a refinery in the region, which is now ended but is being followed by a period of planned maintenance which has further curbed availabilities of Group I base stocks from this plant. There may be no spot availability from this source until at least October and perhaps even later.

Group II markets are stable with good availability of all grades. Material from the Far East keeps finding a way into the European domain with more and more sellers trying to establish a foothold in the Mediterranean regions.

Group III oils are showing some strength as some prices were adjusted upward at the beginning of September, but grades with partial slates of finished lubricant approvals are still being sold at very low prices around Europe. Supply still seems ample, though some believe a new formulation for Volkswagen engine oils could cause demand spike since it allows Group III to replace PAOs.

Crude and feedstock prices stayed steady last week but started to rise Monday. Dated deliveries of Brent crude started are now quoted at $62.50 per barrel for November front month settlement, some $4 higher than last reported. West Texas Intermediate climbed a similar amount to $57.75/bbl, still for October front settlement. ICE LS gas oil surged some $35 per metric ton to $591/t, September front month. These prices were obtained from London ICE trading late Monday.

Europe

Prices for European Group I exports remain in the same ball park as last week without any clear impetus for change. Availabilities are still adequate overall, although some producers are short on light neutrals for export. This may be due more to maintenance turnarounds and production cutbacks than increased demand.

Solvent neutral 150 is still priced between $575 per ton and $598/t and SN500 is offered at $580/t-$605/t. Bright stock may be trending long as a number of suppliers are keen to move large parcels to deplete inventories, and prices have dipped to $665/t-$695/t.

Export markets are tough for traders looking to sell into traditional outlets in Middle East Gulf and India, where Asian prices are weakening. In West Africa there is competition from aggressively priced Group I coming out of the United States Gulf Coast.

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

Group I trading within Europe has returned to normal after the summer holidays. There is a modicum of buying interest from some large blenders, based on a sense that rising crude costs could exert upward pressure on base oil values. For the moment, prices remain at the levels theyve been for the past three months, still 85/t-100/t higher than export prices.

European Group II values are unchanged, but downward pressure seems to be building as the number of lower-prices cargoes arriving from the Far East rises. Europe has the highest Group II prices in the world, and the premium over Group I levels there is keeping blenders reticent to switch completely from Group I.

European Group II are unchanged at $700/t-$815/t (625/t-730) for 100 neutral, 150N and 220N and $720/t-$825/t (640/t-740) for 500N and 600N. These prices pertain to the full range of available grades, including those with and without full slates of lubricant approvals and oil from the Far East and the U.S.

Group III prices are stable after the small increases applied to some supplies at the beginning of September, and the market remains balanced with adequate supplies of all grades available and demand relatively constant. Grades with partial approvals are assessed in wide ranges at 655/t-710/t for 4 centiStoke oils and 660/t-720/t for 6 and 8 cSt, basis FCA ex hubs in Northwestern Europe.

Fully approved Group III oils are at 795/t-855/t for 4 cSt, 825/t-915/t for 6 cSt and 795/t-870/t for 8 cSt, all on an FCA basis ex Antwerp-Rotterdam-Amsterdam.

Baltic and Black Seas

A large cargo of Group I grades being exported through Baltic ports is being loaded for receivers in Nigeria. This cargo will load at two or more ports to lift some 13,000 tons of Russian export grades in addition to material loading from Gdansk, Poland. Prices have obviously been successfully negotiated to allow this movement to take place; recently values offered from Russian refineries have been too high to compete with alternative sources along the U.S. Gulf Coast and mainland Europe.

There are plans for a number of parcels to move from the Baltic into the United Kingdom prior to the end of October, when it looks like Brexit will eventually happen. Buyers are preparing for the possibility of the U.K. crashing out without an agreement with the EU, an event which could significantly raise costs for U.K. blenders working with Russian and other Baltic material. Cargoes between 3,000 and 5,000 tons are moving into Antwerp-Rotterdam-Amsterdam from Kaliningrad with September contract barrels arriving into these ports during second half of this month.

Prices are unchanged at $475/t-$500/t for SN150 and $485/t-$520/t for SN500, basis FOB. Values for bright stock loading ex Gdansk refinery dipped to $665/t-$685/t, following the trend in mainland Europe.

Prices for Russian oils emerging from the Black Sea continue to attract strong buying interest from traders and receivers in markets such as Middle East Gulf and the West Coast of India. A cargo of more than 10,000 tons of Group I loading from the STS facility at Kavkaz, Russia, is scheduled to be delivered partly to Greek receivers, with the rest bound for Rotterdam. Prices for this cargo and other emanating from this source are indicated at $454/t for SN500 and $436/t for SN150.

Offers for Mediterranean Group I base oils are bombarding Turkish buyers, but few are biting since many blenders do not require European approvals. These buyers have two alternatives: to purchase small truckloads from the refinery at Izmir, Turkey, which meets the same specifications at Mediterranean-sourced material;or to use Russian barrels that cost less.

Mediterranean oils are offered to receivers in Turkey at $577/t for SN150, $582/t for SN500, $598/t for SN600 and $745/t for bright stock, all on a CIF basis. Little buying interest has been generated at these levels due to the low prices for material loaded ex Kavkaz.

Group II and Group III base oils continue to be made available on an ex-tank basis within Turkey. These base oils have been sourced from Northwestern Europe, Spain, the Far East and the U.S., both in bulk and in flexitanks. Quantities are still rather small, with the emphasis of the Turkish market still heavily reliant of Group I base oils, although this is changing, and Group II availability and offtake is growing dramatically.

Middle East Gulf

Red Sea reports are lacking this week, although large cargoes will probably of both Group I and Group II will probably load from Yanbual Bahr and Jeddah, Saudi Arabia, for the West Coast of India and the United Arab Emirates.

No Iranian Group I cargoes were identified this week, though cargoes are still reputed to be coming out of Iranian ports. Prices for premium Iranian SN500 are being indicated at around $545/t FOB based on information from U.A.E. sources.

Group I trade in the Middle East Gulf is quiet other than quantities being routinely supplied from Yanbu and Jeddah. Another cargo ex Kavkaz was said to be loading for receivers in Sharjah, with prices indicated at $550/t for SN500 and $530/t for smaller quantities of SN150. These will undercut Iranian levels, although the Iranian barrels carry a slightly higher specification.

Values for partly approved Group III ex Al Ruwais, U.A.E., and Sitra, Bahrain, are unchanged, although trade is quiet, perhaps due in part to a maintenance turnaround at Al Ruwais, which may have curbed new supplies moving to distributors in Europe and the U.S.

Estimated FOB price levels remain at $685/t-$725/t for the three Group III viscosity grades, though 8 cSt grades going into India and China will yield lower contribution levels due to lower local prices. Group III oils marketed from Sitra by Neste will have higher netback levels thanks to full slates of European OEM approvals. Prices rose by some $10/t-$15/t in European markets from Sept. 1, and notional netback levels are now assessed at $785/t-$895/t for 4, 6 and 8 cSt grades delivered into the European market. It should be noted that most of Neste oils supplied into Europe originate at its refinery in Porvoo, Finland.

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

Group II prices in Middle East Gulf are unchanged $775/t-$880/t for 100N, 150N and 220N and $785/t-$900/t for 500N and 600N. These pertain to FCA sales from U.A.E. hub storage of oils sourced from the U.S., the Far East, Saudi Arabia and now Europe.

Africa

North African sources report another cargo of around 3,500 tons loading out of Italy and discharging in Mohammedia, Morocco. This is a cargo with the three standard Group I grades on board, purchased to replace output lost to the closing of a plant there a couple years ago. The Egyptian third quarter bright stock tender will wrap up this month, covering one cargo going into Alexandria in the next week or so and another supplementary cargo to be supplied before the end of the month.

West Africa has awoken from the summer holiday period, with the reports of three large cargoes loading from various points to arrive into Apapa during late September or early October. The largest of these parcels includes 13,000 tons of Group I grades loading out of the Baltic. The second consists of oils from Antwerp-Rotterdam-Amsterdam plus an Atlantic or Mediterranean port, suggesting that all required grades have not been possible to load out of a single loadport. The final cargo will load out of a main port along the U.S. Gulf Coast and consist of 7,000 tons.

Prices for these cargoes have not yet been disclosed but are assumed to be unchanged from current levels for material going into Nigeria. Group I values are at $695/t-$720/t for SN150, $695/t-$720/t for SN500 and $875/t-$910/t for bright stock, while SN900 is indicated at $715/t-$725/t. The Nigerian market is relatively stable and has seen prices remaining around similar levels over the past few months.

These prices refer to parcels or cargoes of at least 7,000 tons delivered into Apapa port, 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.