VLCC rates are rising with potential further increases; Suezmax rates show optimism in the Atlantic but remain flat in the East, while Aframax markets are stable but anticipate stronger activity ahead, reports Fearnpulse.
VLCC
The front end of the MEG menu has thinned substantially both in numbers and in who controls the tonnage. Arguably there are question marks as to the fixture count and remaining volumes for September, but with the October program just around the corner anyone exposed into the early part of “next” month should be careful to rest on the laurels. TD3C is likely now priced at minimum WS 55 and few will be surprised to see something north of WS 60 before the week is over. Falling oil prices will also whet the appetite for more spot purchasing from both the MEG and the Atlantic. The WTI-Dubai spread, adjusted for slight backwardation is back at levels where USG-East activity was much higher earlier in the year. Worse case sideways – upwards risk evident.
Suezmax
There’s a feeling of renewed optimism in the wider Atlantic as relatively cheaper oil hits the market. This should kick start firmer freight rates due to the cheaper WTI pricing coinciding with October fixing dates, a month that has historically set the scene for the winter. In the here and now, TD20 remains fairly flat but we envisage the market staging a recovery in the next couple of weeks due the aforementioned fundamentals.
The East has flattered to deceive. After a couple of headline MEG/East rates last week, the region is very quiet with mainly Indian market cargoes providing the only above radar action. MEG/East will trade WS 105-110 and BOT/UKCM needs a test but probably trades WS 50’s via Cape.
Aframax
For the last few weeks, the North Sea market has remained stable at around the WS 115-120 level. Activity has been limited with a lot of stems covering either on Suezmax or own tonnage. US markets remain soft, but is anticipated to pick up towards the end of the month, and with Libya barrels starting to flow again and Mediterranean market firming, tonnage does have an alternative which could attract tonnage out of the area and start to affect North Sea rates if tonnage thins.
Mediterranean Aframax have seen rates rise from the bottom giving a sense of better days to come. It might take a while for things to kick on but the increase in barrels from a functioning Libya should at least bring some stability to the region. Window is edging towards mid-third decade and prompter vessels will be hoping for an influx from North Africa. CPC fixing is also there to progress with the added implications of increased delays at the Turkish Straits.
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Source: Fearnpulse
