Unusual strengthening in the US Aframax tanker market has compelled more crude oil shippers to use larger Suezmax vessels in recent weeks, according to shipping sources.
There have been at least nine vessels on the voyage charter market over the past two weeks making the trans-Atlantic voyage from the USGC to Europe, six Suezmaxes and four Aframaxes, according to S&P Global Platts data.
Aframaxes are typically used to carry crude across the Atlantic to Europe; however, recent strength in the smaller ship class has prompted charterers to take Suezmaxes vessels on the journey, shipping market sources said.
Comparing the cost
Platts assessed the cost of carrying 70,000 mt of crude on a Aframax vessel from the US Gulf Coast to the UK Continent at $17.03/mt Monday. Freight for Suezmax voyages carrying 145,000 from the USGC to the UKC last traded at Worldscale 65, when Oxy placed the Front Crystal on subjects loading at Corpus Christi.
Applying a flat freight of $15.48/mt, as is the base for Platts Aframax assessments on that route, w65 on that route is the equivalent of $10.06/mt. Aframaxes have held a $6.97/mt premium over Suezmaxes for the journey; however, the smaller vessel commanded a $9.76-premium on September 5.
Comments
This trend could reverse as recent bullishness in the Suezmax segment could prompt charterers to move back to Aframax vessels to make trans-Atlantic runs, a shipbroker said.
One North Sea crude trader said that US light sweet crude, specifically WTI in Houston, continues to be an appealing option for buyers in Europe. “WTI MEH has been working better into Europe,” the trader said.
US crude export
The Suezmax tanker Cape Brindiski is set to be loaded with US crude this week and then will sail for Trieste, Italy, according to a S&P Global Platts shipping report. The Cape Brindiski was at the Energy Transfer Partner docks in Nederland, Texas on Monday, according cFlow, Platts trade flow software. Vitol is listed as that shipment’s charterer.
US crude exports saw a sharp increase during the week ending September 7. The Energy Information Administration reported last week that some 1.83 million b/d of US crude was exported, which was an week-on-week increase of 320,000 b/d.
A widening Brent-WTI swaps spread has allowed for more US crude to be exported. The 30-day rolling average spread between the front-month Brent-WTI swaps is $7.66/b. Last week the spread was as wide at $9.56/b. It settled Friday at $8.89/b.
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Source: Platts
