Prior to the Thanksgiving holiday in the US, we expected that TC2 would find some freight rate support in the short-term as we moved into this week with a relatively thin tonnage list. This expectation has come to fruition over the last two days as TC2 opened to week at WS 125 and has risen to WS 160 as of today. This 35 WS point run-up is mainly driven by higher gasoline demand in West Africa pulling volumes out of the UKC and thinning the tonnage list in Northern Europe. With positions tight in the UKC and a relatively healthy ...
Filling the Gap: Part 3
Nov. 21, 2017
US crude has been making its way to Eastern markets in high volumes this year with official monthly data from the US Energy Information Administration (EIA) indicating an average of 896,000 b/d through August 2017. In the past, a majority of US crude was piped north into Canada; in fact, from 2010 to 2015 an average of 94% of US crude was exported to Canada. The removal of the ban on US crude exports at the tail end of 2015 allowed this figure to fall to 61% in 2016 amid higher flows to Northern Europe, the Caribbean, and ...
Filling the Gap: Part 2
Nov. 16, 2017
One major oil producing nation that we expect to fill the demand gap in the East is Brazil, which has increased crude production by 155,000 b/d year-on-year to 2.6 million b/d over the first 10 months of 2017. Levels are expected to rise further to upwards of 2.8 million b/d next year and with demand on track to rise to 1.78 million b/d, we foresee the crude balance available for export expanding by about 135,000 b/d on average next year. Export volumes into China continue to follow their upward trend ...
Filling the Gap: Part 1
Nov. 14, 2017
The Middle East and West Africa stand as two of the largest oil producing regions in the world accounting for over 32 million b/d of crude supply in 2017 and exporting 75% of that to refiners across the globe; however, their largest clients are located in Asia. Within Asia, the Far East and South East Asia regions currently account for around 29.3 million b/d of refining capacity; however, by 2025 this figure is on track to rise to over 32 million b/d. The outlook for regional crude supply is not as promising and expected to fall ...
The Orders Roll On
Nov. 9, 2017
Through the first 10 months of 2017, tanker contracting activity has increased relative to last year as through the same period of 2016 we recorded 109 vessels ordered, while this year we have seen 165 tankers place on order. Year-to-date, the bulk of ordering activity has been on the dirty side with 47 VLCCs, 18 Suezmaxes and 25 Aframaxes, while no Panamax newbuildings have been ordered. On the clean side, we have witnessed about 75 newbuilding contracts, 12 LR1s, 52 MR2s and 11 MR1s. Contracting activity still pales in comparison to 2015, when the market was booming and 267 vessels ...
Middle East Tensions Present Arbitrage Opportunities
Nov. 7, 2017
Tensions in the Middle East have surged recently as Saudi Arabia intercepted a missile launched out of Yemen, allegedly fired by Houthi rebels. According to the Saudi Press Agency, the missile was made in Iran and likely smuggled into Yemen, reinvigorating the belief that Iran has been arming Houthi rebels. Saudi Arabia has indicated that tensions may rise further as the Middle East power views the incident as an attack from Iran. This follows just a day after dozens of government, military and business officials were detained in an effort to combat corruption in Saudi Arabia. On the back of ...
