OPEC spot fixtures in August declined for the second consecutive month to average 13.0 mb/d, down 0.6 mb/d from the previous month but still 0.5 mb/d above a year earlier. In two months OPEC spot fixtures dropped 1.5 mb/d, resulting in a 3 percentage point drop in OPECís share in total spot fixtures, which stood at 64%, the lowest level in the last five months. When compared to a year earlier, however, the share of OPEC fixtures remained unchanged. The decline in spot fixtures was driven by the drop in Middle East/Asia fixtures, particularly from China, which had set a programme of refining maintenance in August/September. However, fixtures from the Middle East (including non-OPEC countries) to Asia lost 0.9 mb/d to average 5.0 mb/d, while spot fixtures from the Middle East to westbound rose 0.5 mb/d to 2.3 mb/d, the highest level since January 2006, due particularly to strong imports from the USA supported by the partial outage of BP Prudhoe Bay oil field in Alaska. Despite the decline of August, total Middle East spot fixtures remained 1.1 mb/d higher compared to a year earlier. In contrast, non-OPEC spot fixtures recovered from the decline of the previous month and increased 0.7 mb/d to average 7.3 mb/d, which corresponded to a y-o-y growth of 0.2 mb/d. As a result, global spot fixtures (OPEC and non-OPEC) remained almost stable at 20.3 mb/d but displayed an increase of 0.7 mb/d from a year earlier.
Following the same trend, OPEC sailings dropped 1.0 mb/d to average less than 23.2 mb/d, the lowest level in 20 months. The strong drop in sailings was essentially the consequence of the 0.9 mb/d decline in chartering in the previous month.
Preliminary data shows that arrivals at the US Gulf Coast, East Coast and the Caribbean reached a record-high of 11.9 mb/d after a 0.63 mb/d increase in August while arrivals at the Euro Mediterranean basin rose 0.18 mb/d to average 4.5 mb/d, remaining 0.3 mb/d lower than a year earlier. In contrast, North-West Europe saw arrivals drop by almost 0.5 mb/d to average 7.6 mb/d, down 0.2 mb/d from a year ago.
Strong activity from charterers in summer continued to support the crude oil tanker market and made average freight rates in August higher than historical levels. Usually, August is considered one of the months when spot freight rates hit their lows during the year, but it was not the case this year due to strong activity from charterers. In the VLCC sector, long-haul Middle East/eastbound and westbound spot freight rates remained stable at WS132 and WS96 respectively, but when compared to the corresponding month last year, rates were almost double on the Eastern route and more than 50% higher on the Western route. It should be noted that rates surged significantly following BPís decision to partially shut its crude oil production from Prudhoe Bay oil field in Alaska. The loss of output from that oil field forced BP to look for additional vessels to compensate for the lost production by importing from other regions to the refineries on the West Coast. As a consequence of lower tonnage availability, freight rates for tankers moving from the Middle East and Asia surged by more than 40 WS points or 20% between the first and the second week of August. By monthís end, VLCC freight rates started to soften by monthís end after it appeared that the loss from BPís oil field would be lower than expected which, combined with a slowdown in activity from Chinese buyers due to refining maintenance, increased the availability of tankers. In addition to sustained activity from the USA and China, Iranís reported use 10 VLCCs as floating storage helped keep the tanker supply tight in summer, supporting rates to remain strong in August. The Suezmax sector performed better than in the previous month due to healthy activity from the USA. However, freight rates on the West Africa/US Gulf Coast and the trans-Atlantic routes rose by around 12% to average WS176 and WS169 respectively, their highest levels since l February. When compared to a year earlier, both routes displayed a 66% y-o-y increase. Similarly, freight rates of Suezmaxes moving from West Africa to the US Gulf Coast increased suddenly between the first and second week of August following BPís output disruption at the Prudhoe Bay oil field. Rates gained on average 40 WS points or 25% in just one week. Contrary to VLCCs and Suezmaxes, the Aframax sector showed a mixed pattern with freight rates on the Indonesia/US West Coast route continuing their upward trend and increasing for the second consecutive month to average WS223, a gain of 21 WS points or 10% over the previous month. Freight rates within the Mediterranean basin as well as from the Caribbean and the US East Coast remained stable at around WS182 and WS205, respectively. However, freight rates on the Mediterranean/North West Europe route lost 25 WS points or 12% to stand at a monthly average of WS182. The decline observed on this latter route was due to excess tonnage as a result of lower activity from charterers in anticipation of strong planned refining maintenance in the coming months in North-West Europe. Compared to a year earlier, all routes enjoyed much better rates except for the Mediterranean basin where rates were similar.
For the period January-August 2006, average freight rates in the VLCC and Suezmax sectors were 10-25% higher, depending on the route.
Clean tankers saw mixed patterns in August with East and West markets moving overall in opposite directions. Contrary to the previous month, spot freight rates for tankers doing business in the East jumped by around 38%. In contrast to the previous month, all routes weakened in the West apart from the Caribbean/US Gulf Coast route. Due to tight tonnage availability in the region, freight rates on the Middle East/Asia and the Far East routes rose 71 and 93 WS points respectively to average WS273 and WS337. It is worth noting that freight rates in the East of Suez followed a steady upward trend since the beginning of the month. In the West of Suez, freight rates on the Caribbean/US Gulf Coast route rose 15 WS points to average WS350, the highest level since January 2006. The exception of growth on this route compared to the rest of the routes in the West was essentially due to sustained activity as a result of BPís partial oilfield shut-in, which kept rates hovering around WS350 over the month.
In contrast to the Caribbean/US Gulf Coast route, rates within the Mediterranean and from there to North-West Europe fell 33 WS points or 11% each to average WS263 and WS273 respectively. Freight rates on the trans-Atlantic route edged down a slight 8 WS points or 3% to WS304. Nevertheless, despite the decline in
the East of Suez, freight rates on all routes performed better than a year ago, particularly in the West where rates were 40-70% higher.