Preliminary data shows that OPEC spot fixtures declined by 2.3 mb/d or 15% to 12.9 mb/d in February, offsetting to some extent the significant growth of 3.6 mb/d
observed in the previous month. With this sharp decline, which was the highest since December 2004, OPEC spot fixtures were almost 3 mb/d lower than a year
earlier. The drop in spot fixtures was driven by disruptions in Nigeria’s production and lower activity from the Western hemisphere countries due to seasonal trends.
OPEC spot fixtures accounted for 66% of total spot fixtures against 70% in the previous month and 62% a year earlier. Middle East/eastbound and westbound spot
fixtures lost 1.1 mb/d or 13% to average 7.3 mb/d with westbound losing 22% to settle at 1.8 mb/d since some countries have cut purchases in anticipation of refining
maintenance, especially in Europe. Despite the overall decline in spot fixtures, the Middle East/eastbound share in total spot fixtures remained stable at 28% and even
higher than last year’s 25%, meaning that purchases from Asian countries remained strong compared to other regions, while the westbound share fell from 11% to
9%. In contrast, non-OPEC spot fixtures increased slightly to 6.6 mb/d, resulting in an increase of their share in total spot fixtures from 30% to 34% in February.
However, similarly to OPEC, non-OPEC spot fixtures have declined by 3 mb/d compared to a year earlier. Preliminary data for sailings shows that OPEC’s sailings
jumped by 1.8 mb/d to hit 25.7 mb/d, reflecting the strong increase in OPEC’s fixtures of the previous month. Sailings from Middle Eastern countries surged by 1.4
mb/d to average 18.8 mb/d, reversing the continuous decline observed during the previous three months. Arrivals increased in all the main consuming regions except
in North-West Europe with US Gulf/East Coasts and the Caribbean continuing their upward trend for the second consecutive month to average 11.1 mb/d, an
increase of 0.7 mb/d or 7% over the previous month and 0.1 mb/d more than a year earlier. Arrivals in Japan reversed the downward trend displayed during the
previous two months, increasing by 0.4 mb/d to reach 4.5 mb/d, a 24-month high, while arrivals at the Euro-Mediterranean region rose by almost 1 mb/d or 23% to
5.1 mb/d. In contrast, arrivals at North-West Europe dropped by 0.7 mb/d or 9% to average 7.51 mb/d, the lowest level since December 2004.
The tanker market for crude oil showed mixed patterns with spot freight rates for VLCCs and Suezmax tankers remaining strong during the first three weeks of the
month before falling sharply while Aframax tankers displayed an overall downward trend throughout the month to hit very low levels. Freight rates lost between 20%
and 27% during the last week of February to hover around WS100s for VLCCs moving from the Middle East to the East, compared to WS170 in the first week and
WS90 for VLCCs moving to the West, while Suezmax tankers trading between West Africa or north-West Europe and the USA hovered around the WS130s. The
weakness in freight rates, especially at the end of the month, was due to weakening trade activity in anticipation of lower seasonal demand and disruption in Nigeria’s exports. On a monthly basis, VLCC spot freight rates on the Middle East/eastbound and westbound long-haul routes remained stable at WS131 and WS103,
respectively, but compared to last year they were 10-15% lower. In the Suezmax sector, freight rates for tankers moving from West Africa to the US Gulf Coast and
from North-West Europe to the US East and Gulf Coasts increased by 11 and 16 points respectively to settle at around WS180. Compared to last year, Suezmax
freight rates were 8 to 13% higher in February 2006. In contrast, the Aframax sector saw freight rates fall sharply on all routes with some exceptions for the
Caribbean/US East Coast route, which edged down by just 7 points or 3% to average WS235. Rates on the Indonesia/US West Coast route lost more than 100
points or 37% to stand at a monthly average of WS170, the same level as a year earlier, but the lowest since September 2005. This substantial decline was attributed
to ample tonnage on the back of very low activity. Rates in the Mediterranean basin and from there to North-West Europe showed the same trend but at a lower pace falling by around 20% to average WS154 and WS146, their lowest levels since May and September of last year. The ease in activity was due to lower demand
ahead of refinery maintenance in Europe. On the Aframax sector, with the exception of the Mediterranean/Mediterranean and Mediterranean/North-West Europe
routes which declined by 32% and 25% y-o-y, freight rates on the other routes remained higher compared to February 2005 levels.
The product tanker market weakened substantially on all routes, especially on the Middle East to the East and within the Mediterranean Basin and from there to
North-West Europe, where rates lost more than 100 points due to continued lower seasonal demand from Asian countries and weaker activity in Europe following
heavy refinery maintenance in March. Spot freight rates for tankers of 30,000-50,000 dwt on the Middle East/East route dropped by 156 points or 43% to average WS207, their lowest level since mid-2004. Freight rates for cargoes moving between Singapore and Asia and from the Caribbean to the US Gulf Coast as well as for the transatlantic cargoes lost around 12% to average WS352, WS327 and WS297 respectively. However, in the Mediterranean and from there to
North-West Europe, freight rates lost around 110 points or 27% to average a respective WS300 and WS312 amid lower demand. It is worth noting that rates on
these routes lost 40% between the first and the last week of the month decreasing from an average of WS380s to WS230s.