Monday, May 18, 2009
Low Demand, OPEC Hurt Tanker Market in April
Monday, 18 May 2009
As OPEC continues to keep oil market supply tight showing a high compliance with current reduced production quotas that decided last December, oil exports from cartel members were lowered, for one more time, in April. According to the last OPEC's Oil Market Report for the month of April, the lowered exports affect exports and of course tanker sailings from Gulf region. Sailings from OPEC were 2% lower in April, at 18.37 mb/d, down from 18.68 mb/d in the previous month, and were also 22% lower than at April 2008. Middle East sailings in April were at 13.39 mb/d, less than 1% lower than at the previous month and 22% lower than at a year earlier. Crude oil arrivals in the USA increased by 3% in April compared to the previous month. Crude oil trade figures indicated that US crude oil imports were 4% higher in April compared to the previous month, in line with higher crude arrivals to this country. Crude oil arrivals to Japan were lower in April, while arrivals to Europe were higher, both compared to the previous month.
In April, the tanker market witnessed the weakest month thus far in 2009. The continued global economic crisis and OPEC production adjustments were, once again, the dominant drivers behind the weakness of the market. Seasonally, as we approach the driving season, the tanker market firms in April, but this year no sign of any seasonal effect has emerged. High tonnage availability on many key routes, especially those heading from the Middle East, continued to pressure the market and the continued storing of crude at sea did not stimulate dirty freight rates enough, though it is fair to say that it prevented them from incurring deeper declines. In April, storing at sea continued the momentum it gained towards the end of March supported in part by low freight rates. Estimates put the number of VLCCs tied up in storage operations in April at about 50 vessels, representing about 10% of the global VLCC fleet, located mainly in the US Gulf and North West Europe. A very weak Suezmax market during the first two weeks of April in both West Africa and North West Europe resulted in freight rates for this vessel size witnessing the sharpest decline in the month compared to other sizes. Aframax freight rates were very much influenced by the almost 50% decline in the Caribbean to US route.
Taking the top three vessel categories into consideration, average spot freight rates for crude oil tankers were 28% lower in April compared to the previous month, but were 64% lower compared to the same month a year earlier, taking into consideration the changes in world scale (WS) flat rates as of January 2009. The VLCC sector, which was the weakest sector in March, declined further by over 20% in April. Last month's high activity in the Suezmax sector subsided in April and this sector ended the month with a 27% decline compared to March.
Aframax freight rates were 27% lower in April, severely influenced by the very weak Caribbean market, while other routes were generally weaker, but to a less extent. On average, VLCC spot freight rates were 23% lower in April compared to the previous month, yet 65% lower compared to April 2008. The fact that about 90 VLCCs were still tied up in storage operations in April did not offset the effect of high VLCC tonnage availability in the market, mostly influenced by OPEC's decision to adjust production by more than 4.0 mb/d from September levels, as well as maintenance in Asia and new vessels entering the market. It was reported that about 80 VLCCs lifted crude oil from the Middle East in April compared to a monthly average of 104 VLCCs in 2008. Spot freight rates for VLCCs trading on the long haul route from the Middle East to East, which declined by 15% in March compared to February, declined by another 25% in April compared to March. Freight rates on this route declined as far as WS25 during the third week of the month before rebounding during the last week, ending the month at an average of WS30. Middle East to West spot freight rates closed the month at a drop of 32% compared to the previous month, ending at an average of WS22 down from an average of WS33 in March. On the other hand, VLCC spot freight rates for voyages from West Africa to East were fluctuating between WS33 to WS38 throughout the month, ending at an average of WS36, about 15% lower compared to the previous month.
Suezmax spot freight rates for voyages to the US from West Africa and North West Europe (NWE) declined in April by an average of 32% compared to the previous month, yet were 62% lower compared to March 2008, taking into consideration the changes in WS flat rates as of January 2009. Lower Bonny Light exports in April as a result of a fire on the Trans-Niger Pipeline had pushed freight rates on the West Africa to US route to as low as WS47 during the second week of the month. Rates started to firm during the second half of the month, ending at a monthly average of WS54, 33% lower compared to March. The decline was at about 30% for the NWE to US route which ended the month at an average of WS52.
Average Aframax spot freight rates for the four reported routes declined in April by 27% compared to the previous month, but were 66% lower compared to a year earlier. Freight rates on the Caribbean Aframax route to the US East Coast indicated the sharpest decline of 48% compared to March backed by high tonnage availability in the market throughout the month.
Rates on this route started the month at about WS100 going down to the WS50s through most of the month and ended at a monthly average of WS62. Freight rates on other Aframax routes were generally weaker in April. Despite some support to freight rates in the Mediterranean market as a result of higher May loadings of Azari Light from Ceyhan in Turkey, freight rates in the Mediterranean ended the month at a 13% drop in the cross-Mediterranean route and 18% in the Mediterranean to NWE route, both compared to the previous month. To the East of Suez, freight rates on the Indonesia to East Aframax route were 12% lower in April compared to March, mainly due to modest activity and plenty availability of tonnage.
0 comments:
Post a Comment