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Fuel Oil Spread Ebbing and Flowing

Oct. 29, 2021

With decarbonization dominating discussions around fuels these days, the reality is that the vast majority of the merchant fleet is and will continue using conventional bunkers for its needs.  Before alternative fuels were the main topic, the IMO 2020 regulation brought VLSFO to global bunkering hubs and with it the discussion on the viability of scrubbers. The economic case for them was based on the price differential between high sulfur and low sulfur fuels.

This price differential has allowed vessels with scrubbers to increase their TCEs by consuming cheaper high sulfur fuel oil.  As an example, our calculations for the ...

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VLCC Liftings and End-User Demand

Oct. 22, 2021

The current energy crunch, mainly in Europe and Asia has pushed refining margins up to their pre-pandemic levels in almost all global regions.  A surge in demand mainly in the northern hemisphere during the summer months has brought product inventory levels down, effectively clearing the buildup observed during the first nine months of 2020. According to JBC Energy, core product average inventories for Q3 2021 were about 1.3 million b/d lower than the 5-year average levels. 

Robust end-user demand appears to be continuing through Q4, although as we have noted before, oil demand does not always translate in ...

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LPG Supply/Demand Highlights

Oct. 15, 2021

LPG demand has been making headlines recently, mainly due to the recent pricing volatility in the Asian markets, but also in the West of Suez (Europe/US).  Asian markets are currently increasing LPG stocks in anticipation of winter heating demand, tightening the market as petrochemical facilities ramp-up their feedstock requirements amid an improving global economy.  One result of this pricing strength for LPG was observed in August/September when demand shifted to naphtha as a feedstock, supporting LR volumes and freight rates on the benchmark TC1 AG/Japan trade.  This week, reports by Platts and other sources pointed to a ...

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Opportunities in the LR1 Space

Oct. 8, 2021

Since our Tanker Market Outlook back in January we have placed emphasis on opportunities that may arise in the LR1 sector.  This often-overlooked tanker has the versatility to compete with the larger LR2 on some trades, as well as with MR2s for smaller cargo stems.  The trades in the LR1 space are far less consolidated than the larger tankers given it is flexible enough to operate in many areas and under many scenarios.  Despite that, we have identified some “pockets” of interest.

Overall, the global LR1 ton-mile demand is projected to grow on average by 1.1% in 2021, followed ...

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VLCC Floating Storage Update

Oct. 1, 2021

This coming week, OPEC and allies are meeting to decide on whether they will remain on the current plan of production increases of 400,000 b/d until the end of the year or modify it to better address rising global oil demand.  This is especially important if we consider the current energy crunch China is facing, as well as pressures from Europe and the West who are experiencing increasing gasoline prices, more so after hurricane Ida and other storms shut in production and disabled refineries in the US Gulf region, but also due to the concurrent rage in natural ...

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