Crude is still relatively stable with Dated Brent trading at around $107 per barrel. Syria and Ukraine politics have not affected crude futures as expected. ICE gas oil has also traded conservatively, at around $893 per metric ton in late trading on Tuesday.

Increasing demand has Group I light neutrals prices climbing some $20-$30/t this week, to new highs of $1035-$1065/t in offers for prompt sales. As mentioned, avails – particularly of SN 150 -are tight or non-existent in offers for other materials.

Heavier vis grades such as SN 500 are inexplicably showing more availability with prices almost in line with SN 150 offers, at around $1040-$1070/t. Its rumoured these grades will likely go neat soon throughout the Europe-Middle East-Africa region.

Bright stock prices have been flexible, with some suppliers offering on a fixed price basis, where others have linked selling levels to published prices which are considered on the low side, resulting in large premiums being added. Levels are assessed at $1220-$1235/t. There is still healthy demand for bright stock in export markets such as India, United Arab Emirates and West Africa.

Above prices refer to offers and sales of Group I base oils from mainstream sellers within mainland Europe and North Africa, based on availability of each grade.

The European domestic markets have also shown Group I price increases, without explicit mention of SN 150 shortages. Some buyers commented on Baltic shortages, and using alternative sources for certain batches of finished lubes. In what may be a long-term supply problem, some advocate Group II for automotive blends.

The current differential between domestic prices and export sales is 65-85/t.

Within Europe, Group II base oils are cautiously moving ahead. Imports from U.S. have been lifted by source increments, and these are passed on selectively. Meanwhile, imports from Far East are only now marginally increasing prices, perhaps with suppliers concerned about retaining market share in light of both quality compromises and potential oversupply. Light vis prices are held back, almost as if trying to compete with light solvent neutrals. With SN 150 levels rising, there is now perhaps only $25-$30/t difference between the two types of base stock.

Prices within Europe for light vis grades such as 100N and 150N are now $1080-$1120/t, with heavier vis 500N and 600N steady at $1195-$1285/t ex tank sales from various distributors in Antwerp-Rotterdam-Amsterdam.

Group III levels seem stable, based on sellers trying to push price upwards from May 1 not appearing to have sent formal notices to buyers. Demand seems to be positive for the two main grades circulating within Europe, but supply is not a problem for these grades with most sellers reporting adequate positions for the next few months. One or two suppliers made increments of around 5/t on 6 cSt, but prices remain largely unaltered at 955-960/t for the 4 cSt grades, with the 6 cSt between 965/t and 975/t.

Baltic and Black Seas

No vast changes in the Baltic, with many sellers closed at the end of last week for the holidays. Suggestions are that parcels of base oils have been finding their way through to shore storage after refinery turnarounds and the initial Russian and Ukraine situation. Resellers and distributors have not been forthcoming about how much material is available now or during May, but comments suggest supplies could be back to normal within weeks.

With healthy demand, SN 150, SN 500 and SN 900 prices will start to rise, but buyers are resolute that they will not over pay. This could change if some mainstream grades go short, such as SN 150, allowing Baltic prices to be independent of those on the mainland. FOB offers for SN 150 and SN 500 are $1000-$1025/t.

DAF Latvian border levels have moved up some $10/t, hence increasing FOB numbers. SN 900 has been elusive, but one supplier has offered some 3,500 tons for second half May loading. Price has not been disclosed, but is thought to be around $1035/t basis FCA. A number of enquiries are for supplies out of the Baltic in flexies, some of which are being met whilst other sellers are concentrating more on bulk parcels which they say can be moved quicker and easier. They also note that flexies can be profitable, so given some more space to trade, they will return to loading flexies as soon as possible.

Black Sea trade, largely dependent on Crimean and Ukrainian ports, is stymied by Ukraines latest problems. Uzbek prices have upped $5-$10/t with reports of Turkish buyers looking to buy large quantities of SN 150 ( I-20A ). This is perhaps due to limited Mediterranean supplies. Delivered quantities from Mediterranean suppliers into Gebze were landed at $1035/t for SN 150 and $1045/t for SN 500.

Black Sea levels for Fergana and Turkmeni grades are offered at $985-$990/t basis CIF Gebze port. The differentials in price between these and mainstream grades from Mediterranean sources depends on quality.

Supplies of bright stock to Egypt are made under what appears to be a new three month contract of three 2,500 ton cargoes every month with one extra parcel delivered within the quarter.

Sudanese enquiries included a relatively large quantity of around 1,500 tons of Group I to be delivered in flexies, perhaps as an alternative to the bulk tender which is routinely issued, and even more routinely retained by the incumbent supplier. Many traders have declined to offer for it.

Middle East

Middle East Gulf receivers are looking for quantities of bright stock and SN 150, so far without success. With prices for bright stock from Europe offered at $1290/t and buyers expectations at around $1260/t, these movements are impossible. FOB prices ex Singapore are already around $1260/t, hence this option is also closed. Thai suppliers have only just come out of turnaround, and Indonesian Group I supplies are limited. Bright stock supply is constrained due to high-spec requirements, so with the arbitrage ruled out between Europe, Far East and U.A.E., these supplies may again have to be sourced from locations such as U.S. or Brazil.

Quality SN 150 and SN 500 will still be present from Saudi Arabian sources, with some receivers adding they can get by using Iranian grades in the short term, but ultimately will have to secure supplies of premium Group I solvent neutrals.

Some receivers unrealistically expect prices based on last purchases, which were some three months back, and these will not be achieved in the short term. Prices have risen by more than $100/t since March, reflecting increases in feedstock prices and healthy Group I demand.

Local Iranian imports for SN 150, SN 650 and predominantly SN 500 have all been shaved in value, with SN 500 now offered at around $980/t for re-export from U.A.E. ports. However, this is some $10-$15/t higher than the nadir of last week.

Group II imports into Middle East Gulf receivers are gaining ground and with some Group I arbitrage closed, some players may be tempted to move to Group II supplies. Cargoes for May are starting to arrive into U.A.E., Qatar, and Bahrain, while exports of Group III grades from Bahrain into Middle East Gulf receivers and also to external buyers in India show no signs of abating. Exports from the Shell-Qatar Petroleum Pearl complex in Qatar continue to find their way into Europe, Far East, and the Americas. Although this material is predominantly used within Shells system, certain hybrid blends of Pearl production and other materials are available for certain customers in various regions.

Resitting sellers are attempting to hike prices by $20-$30/t, especially for the light grades, May Group II prices have remained almost stable at $1060-$1090/t in respect of the light vis grades, along with 500N and 600N at $1095-$1135/t CIF, all basis Middle East Gulf southern ports.

Africa

East African blenders imported a raft of material from various sources, with Black Sea Uzbek grades, coupled with recycled oils from U.A.E. and Bahrain. Yemeni imports of refined base oils are also going into some locations along the coast. Most of these imports are small quantities, but there are many deals done.

Prices vary enormously depending on payment terms and conditions, but SN 500 in flexies ex U.A.E. is reported at around $1145/t CIF Mombasa. These levels are similar for all SN 500 from that source into Dar-es-Salaam, Mombasa, and into Durban.

South African production of Group I base oils still covers most of the requirements of this and neighboring markets where access is allowed. Speciality oils are imported, such as white oils, transformer oils, and many greases, but traditional supplies from South Africas two refineries are maintained.

West African receivers are remaining calm in spite of dwindling supplies from mainland Europe and the Baltic, along with higher numbers offered in almost every deal. Bright stock has become more available, but with escalating prices these offers have not been popular with buyers in Nigeria.

Prices remain as assessed last week with small increments to SN 150 and also SN 900 at $1110-$1145/t for Group I solvent neutrals, with bright stock offers for landing into Apapa at around $1285/t. Baltic prices for the limited quantities available until the present are similar, and with lower FOB numbers and increased freight, the economics balance out.

Rumours suggest a number of enquiries for parcels from Brazil, Morocco, and the U.S. are sought for delivery into West Africa, along with the continuing Ghana supply contract into Tema which is sourced from West Mediterranean suppliers. This allows further quantities to be added to cargoes carrying the basic parcels to Ghana, which can then be delivered into locations such as Apapa.

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