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Trans-Atlantic Crude Spread Gets Squeezed

June 28, 2018

The US crude export market continues to boom with the latest preliminary weekly estimates from the US Energy Information Administration (EIA) showing a record 3.0 million b/d.  The main driver continues to be a wide discount for WTI crude versus other global benchmarks as North American crude supply growth outpaces demand, projected at 15.7 million b/d by the end of 2018.  This is largely a function of rising crude output in the US and Canada; however, recent news indicates that supply outages in the latter could threaten this trend.  The world’s fourth largest oil producer ...

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Rough Seas on the Route to Recovery

June 21, 2018

The Mediterranean market stands, in our view, as a growth story for tanker demand, indicated in our 2018-2022 Tanker Market Outlook in the context of rising crude production in the Caspian Sea and Libya.  Although confident in growth, we also understood that some level of risk surrounded Libya due to domestic tensions.  Towards the conclusion of 2017, it seemed as though tensions had cooled, allowing upstream operations to gain ground with crude production finishing the year at about 1.0 million b/d (Figure).  Since then, we have observed output levels remain elevated, just over 1.0 million b/d ...

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Suezmaxes Find Utilization Support

June 19, 2018

Throughout May, we observed Suezmax freight rates make considerable gains compared to the previous month with TD6 trading up about 16% month-on-month.  Gains along this trade as well as others can be attributed to 63.4% utilization in May versus 62.1% the prior month (Figure).  This is driven by stronger demand fundamentals against vessel supply (which declined month-on-month) as the Black Sea/Mediterranean market continues to provide support for this sector.  We count roughly 124 loadings in this region in May, a 65% gain month-on-month and the highest levels since 2014, when our vessel position data begins.  Spot fixing ...

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