In the crude market, we have seen historically that about 60% of all volume is carried on VLCCs. This alone makes these giants the main sector to look at when it comes to trying to assess how the CPP markets and dirty tanker fleet will develop in the near and long-term. As we are approaching the middle of Q3 2020, we are starting to have a clearer picture regarding the VLCC fleet development for the entire year. Trying to assess the sector becomes even more significant in a year when pretty much every event since its beginning has been out ...
Naphtha Balances and Emerging Trades
July 24, 2020
During the past few months, we have been discussing potential opportunities in the clean tanker sector, particularly in the development of floating storage. Last week we took a closer look in the LR2 floating storage space, noting that it has likely reached its peak. According to data and forecasts on product balances, we expect LR2s to start leaving floating storage and returning to the trading fleet. Despite that, we still see some trades with the potential to become stronger, especially after data on fundamentals like product balances seem to confirm our initial assumptions. This week, we look at naphtha balances ...
LR2 Floating Storage Development
July 17, 2020
Assessing clean products floating storage can be a little challenging during normal times given the increased price sensitivity of petroleum products as it compares to crude oil, as well as technical considerations such as the degradation of some fuels after a 60-day storage period or longer. Despite that, in the past few months the contango structure of the market has signaled some big opportunities and as a result, we saw a strong increase in floating storage on LR tankers, especially LR2s, which are most commonly used for such purposes.
Looking at the latest available data, we see that the big ...
US Crude Exports Outlook
July 10, 2020
The past few days revealed some new and interesting data regarding possible developments for crude oil exports from the US. In our previous discussion on the subject we highlighted the possibility of steady or even increased exports in 2021 based on an assessment on how the WTI price will move relative to Brent and the incentives this may create for more AG barrels to reach US refineries. This week we are focusing on the short-term, exploring the possibility of US crude oil export coming off to significantly low levels in the following months.
By looking at historical data we found ...
The Beginning of the Drawdown
July 2, 2020
In previous weekly highlights and various of our reports, we have discussed potential scenarios regarding the development of floating storage for crude oil and products. Specifically, we projected that given the OPEC+ cuts, observed balances and the expected demand recovery after the pandemic lockdowns, floating storage would reach a peak in June and ships would start discharging and re-entering the trading fleet by July. As we are now “officially” in the second half of the year, we are going to take a look at floating storage in the VLCC sector.
We have been monitoring VLCC tankers using satellite data and ...
