Tanker Market - Jul 11

Source: OPEC_RP110709 7/12/2011, Location: Europe

In June, estimated OPEC spot fixtures increased by 13.5% compared with last month, to average 13.7 mb/d. Global spot fixtures increased by 5% in June, compared with the previous month, to average 18.4 mb/d. The gain of global fixtures was mainly driven by OPEC fixtures, while non-OPEC spot fixtures declined. Increased tonnage demand for deliveries to both East and West destinations was behind the OPEC fixtures gain.

OPEC sailing followed the same trend and increased 0.13 mb/b in June, compared with last month, to stand at 22.88 mb/d. The OPEC sailing increase came mainly from Middle Eastern shippers. However, arrivals showed a mixed pattern in June as North America, Europe and the Far East registered gains, compared with last month, while West Asia exhibited a decline. Compared with last month, arrivals in North America, Europe and the Far East increased by 3.6%, 2.3% and 4.9% to stand at 9.91 mb/b, 11.61 mb/d and 8.37 mb/d respectively.

The dirty tanker market showed mixed trends in June with VLCC spot freight rates reporting a healthy gain of 8% while both Suezmax and Aframax rates experienced losses of 18% and 3%, respectively, compared with last month. Clean spot freight rates were very weak in June, compared with last month, with West of Suez rates declining 23%, the highest among the different groups, and East of Suez rates closing down by 5%.

For VLCC, spot freight rates for Middle East to East bound destinations indicated the highest increase among all other reported routes in June, supported mainly by higher lifting to China as the refinery maintenance comes to an end. Additionally, India’s crude oil requirements from West Africa further supported VLCC rates from West Africa to East in June. In the West, VLCC spot freight rates from the Middle East to Western destinations gained some ground in June on European demand, supported by the Brent/Dubai differentials, as well as the TransCanada pipeline maintenance.

Additionally, lower North Sea output during the seasonal maintenance period further supported spot freight rates from the Middle East to the West. Compared with the previous month, Middle East to East spot freight rates increased by 14% to stand at WS57 points, West Africa to East edged up by 4% to stand at WS41 points and Middle East to West gained 5% to stand at WS54 points. However, compared with a year ago, all selected route spot freight rates exhibited declines. On average, VLCC spot freight rates decreased by 25%, compared with a year ago.

Suezmax transatlantic spot freight rates declined in June from the previous month. Closed arbitrage of crude oil from the North Sea to the US and the decline of Forties crude oil supply pressured rates in June. Additionally, increased tonnage availability further negatively affected rates in June. Suezmax spot freight rates from NW Europe to the US lost 15% in June, compared with the previous month, and rates from West Africa to the US closed down by 19%. On an annual basis, Suezmax spot freight rates declined 23% in June, compared with the same period a year ago.

Aframax spot freight rates on all selected routes closed down, except Mediterranean to Northwest Europe rates, which remained steady in June, compared with the previous month. Mediterranean to Mediterranean Aframax spot freight rates declined by 6% in June on the back of lower lifting from Primorsk, as well as pipeline maintenance. Caribbean to the US rates declined 3% in June from the previous month due to ample tonnage supply and limited demand. Indonesia to East rates continued their downward trend in June and lost 2% on lower Japanese refinery requirements.

Clean tanker market sentiments were bearish in June on most reported routes. In West of Suez, closed arbitrage and higher stocks in the US affected spot freight rates from the Caribbean to the US, as well as from NW Europe to the US. Compared with a month ago, Caribbean to the US clean spot freight rates declined 13% to stand at WS187 points and NW Europe to the US rates dropped 20% to stand at WS157.

Mediterranean to Mediterranean clean spot freight rates decreased 31%, mainly due to lower gasoil and naphtha trades and higher stock in North West Europe. The lower naphtha trade was partially driven by higher Russia export duties.

In East of Suez, the clean market has suffered from different factors and spot freight rates closed down by 5%. Clean spot freight rates from Middle East to Eastern destination declined by 10% on the back of lower naphtha trade, resulting partially from prolonged petrochemical plant shutdowns. China’s lower naphtha imports added more pressure on East bound spot freight rates. However, the 1% increase of Singapore to East spot freight rates, the only increase among all reported clean routes, was supported by Japanese product imports.


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