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After having increased by more than 2.6 mb/d between April and June, preliminary data shows that OPEC spot fixtures declined slightly in July to average 14.4 mb/d, down 90,000 b/d from the previous month but 0.85 mb/d higher than a year ago. The slow-down in OPEC spot fixtures is essentially due to a fall in OPEC crude oil production. Despite this marginal drop, OPEC’s share in total spot fixtures increased two percentage points to hit 68%, the highest level since January 2006 and 6 percentage points above the same period last year. The decline in OPEC spot fixtures was attributed to countries outside the Middle East, especially Nigeria which faced some output disruptions. In contrast, fixtures from the Middle East (including non-OPEC countries) rose 0.5 mb/d or 7% to average 7.9 mb/d, their highest level in 2006 apart from January. Eastbound fixtures were the main contributor with 83% of the increase after Asian refiners turned to Middle Eastern grades following the increase in the price premiums of West African crudes. Compared to a year earlier, Middle East/eastbound fixtures were 1.1 mb/d higher while westbound fixtures fell 0.3 mb/d. Non-OPEC spot fixtures declined by almost 10% or 0.75 mb/d to average 6.9 mb/d, representing a five-month low and a 1.2 mb/d drop from last year. Consequently, total spot fixtures (OPEC and non-OPEC) moved down 0.83 mb/d or 3.8% to average 21.3 mb/d, nearly 0.3 mb/d lower than a year arlier.
Similarly, OPEC sailings dropped 80,000 b/d in July to average 24.52 mb/d but remained 0.3 mb/d above the year-earlier level. The drop in sailings came essentially as a result of the slow-down in chartering. Sailings from the Middle East rose 0.9 mb/d or 5% to 18.4 mb/d, implying that most of the drop in OPEC sailing can be attributed to countries outside the Middle East.
According to preliminary data from secondary sources, arrivals at the main importing regions showed mixed patterns. The US Gulf Coast, East Coast and the Caribbean saw arrivals increase 0.35 mb/d or 3% to hit a record-high of 12.0 mb/d in July, which was 1.1 mb/d more than last year, while arrivals at North-West Europe increased 0.08 mb/d to average 8.0 mb/d. In contrast, arrivals at the Euro Mediterranean basin dropped 0.1 mb/d to average nearly 4.4 mb/d, down 0.23 mb/d from last year.
The crude oil tanker market got very bullish in July on the return of refineries from their seasonal maintenance programmes with spot freight rates continuing to increase significantly on almost all routes reaching record-highs by the end of the month. VLCC owners doing business on the long-haul Middle East/eastbound route made substantial gains with rates increasing 25 points or 23% to hit a monthly average of WS133, their highest level so far this year on reduced tonnage availability throughout the month. The number of available VLCCs for the following 30 days moved from an average of 53 VLCCs in the Middle East during the first week of the month to less than 40 vessels during the third week. Availability tightened as 120 tankers were booked in July, up from 100 VLCCs in the previous month, with
Shell leading the charterers shipping crude oil out of the Middle East. In contrast to the eastbound routes, Middle East/westbound routes saw rates remain stable at WS94. Nevertheless, when compared to a year earlier, spot rates on this latter route were 30% higher. In the Suezmax sector, West Africa/US Gulf Coast and the trans-Atlantic routes saw rates rise 24 points each to average WS156 and WS152 respectively, which was around 46 points higher than a year ago. Following almost the same trend, freight rates in the Aframax sector gained 60 points or 40% on the Mediterranean/North West Europe route to hit a historical high of WS207 for the month of July. Freight rates within the Mediterranean basin rose 32 points to WS182, while on the Indonesia/US West Coast route rates gained 53 points to average WS202, the second-highest level this year after January. The exception in the Aframax sector was in the Caribbean where rates lost 12 points to stand at WS211, the lowest level in 2006. The weakness in freight rates in the Caribbean was attributed to thin trade in the region where the number of fixtures from the
Caribbean to the USA averaged 36 in July compared to 53 the month before. In the Aframax sector, rates on the Indonesia/US West Coast, the Caribbean/US East Coast and the Mediterranean/North West Europe routes were even higher than in July 2004, the year where rates hit their historical annual levels.
The clean tanker market remained bullish on most routes, except in the Middle East and Singapore where rates declined from their high levels of May and June. Freight rates on the Middle East/Asia route lost 74 points or 27% to average WS202, while rates on the Singapore/Asia route dropped 30 points or 11% to stand at a monthly average of WS244. The softness in the freight rates on these routes came as a correction of the extremely high levels displayed in the previous months. However, despite the softness, rates on both routes remained profitable for ship-owners. In contrast to tankers trading in the East, those doing business in the West saw rates recovering significantly, especially on the Caribbean/US Gulf Coast route where rates spiked 100 points or 42% to hit WS335, the second-highest level in 2006 after January, while within the Mediterranean and from there to North-West Europe and on the trans-Atlantic routes, rates gained between 60 and 70 points to average WS296, WS306 and WS313 respectively. Compared to a year earlier, all routes in the clean market performed better in July, except for the East where rates were 20% lower.
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