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USG Export Activity

March 31, 2023

This week we highlight the strong activity for cargo loading out of the US Gulf.  This level of activity is expected to persist through the summer months due to strong US crude export levels.  Based on our multi-variable regression model, McQuilling forecasts that US crude exports are projected to reach its peak in the mid-year before trending lower towards the 4th quarter. The main contributing factor is the US Strategic Petroleum Reserve (SPR) release, as DOE announced a total of 26 million barrels will be released from April to June, or approximately one extra Aframax loading every other day.  In ...

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HSFO/VLSFO Spread Analysis

March 24, 2023

Due to recent geopolitical and market developments, we consider the possibility for convergence in bunker prices within the VLSFO and HSFO market in the near-term.    Al-Zour, a 615,000 b/d refinery that began exporting products last November, is poised to become a large supplier of VLSFO.  The VLSFO barrels are likely to be exported from Al-Zour in the coming months and could limit the upside to crack spreads.  Furthermore, the availability of cheaper Russian HSFO has provided strong incentive to defer a shift to VLSFO.  These factors in tandem could create downward pricing pressure for VLSFO.

When considering HSFO ...

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Banking Contagion - Deja Vu

March 17, 2023

This past week has been dominated by headlines about Silicon Valley Bank, Credit Suisse, and the health of the banking sector in general.  After a 24% decline it its stock on Wednesday of this week, Credit Suisse struck a deal with the Swiss central bank to borrow up to 50 billion Swiss francs (approximately US $54 billion).  This comes after the chairman of Saudi National Bank, Credit Suisse’s largest shareholder, said it wouldn’t increase its investment stake in the firm.  Now that the bank has addressed the market’s immediate liquidity concerns, it will need to stem customer ...

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Aframax Demand in the Spotlight

March 10, 2023

The situation in Europe remains fluid and we continue to expect to see a large rerouting of flows during the course of 2023.  For Europe we expect to see increased imports from the Middle East, West Africa, US Gulf, Latin America, as well as regional crude grades.  One route in particular we will be keeping a close eye on will be US Gulf to Europe.  Europe is likely to be the most significant demand generator for the class for 2023 based on inflows to substitute Russian barrels although it could lose a very large share of export demand.  The Aframax ...

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EU/Russia Update

March 3, 2023

Given the one-year mark of Russia’s war against Ukraine, we thought it be useful to assess recent developments as it pertains to our industry.  From an energy security standpoint, one could argue that Europe has fared better than initially feared.  Months after invading Ukraine, Russia cut off an estimated 80% of the gas it had previously sent to Europe.  At the time of writing, Europe looks set to avoid fuel shortages that had been forecast last fall after Russia curbed gas pipeline supplies to the region.  Germany will be a particularly important country to monitor as they used to ...

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