Saturday, 4/4/2020 | 4:57 UTC+0
Libyan Newswire

Tanker markets are improving as more cargoes are coming into the market

The tanker market is steadily moving towards better days, as August "blues" are gradually moving away. In its latest weekly report, shipbroker Gibson said that "Suezmaxes trading out of West Africa are leading the way. In early September Shell lifted force majeure on Bonny Light exports, with loading scheduled to reach 220,000 b/d in October. The Qua Iboe exports, the biggest Nigerian crude stream (estimated at over 300,000 b/d before the force majeure) are also expected to re-start as early as late September. Finally, shipments of Forcados crude are anticipated to resume soon, with a preliminary October loading program reported at 230,000 b/d".

According to the London-based shipbroker, "more crude from Nigeria has led to an impressive rebound in Suezmax rates in the region, with the TCE earnings for West Africa - UK Continent up from just under $5,000/day in mid-August to around $35,000/day currently. There is possibility of more barrels loading in the Mediterranean. Libya's National Oil Company is in the process of re-opening Zueitina, Ras Lanuf and El Sider oil terminals and the company hopes to triple domestic crude output by the end of this year. So far the success has been mixed. The government officials stated that one Aframax tanker successfully loaded and departed Ras Lanuf, but loading operations have been temporarily halted due to military clashes".

Meanwhile, as Gibson pointed out, "more evidence supports the view that crude exports out of the Black Sea will increase. CPC exports are scheduled to increase in October, with further gains planned towards the end of this year and throughout 2017 amid rising offshore and onshore production in the Caspian region. The biggest gains are expected on the back of the re-start of the giant Kashagan field and the start-up of the Filanovsky field in the Caspian Sea. The combination of higher volumes out of the Black Sea, coupled with positive sentiment, have offered further support to the tanker market. Despite firming rates and earnings in a number of regional trades in the West, the VLCC AG market remains weak, with spot earnings for Middle East - Japan barely covering fixed operating expenses. It will be interesting to see whether the latest increases in West Africa and the Mediterranean/Black Sea will have a positive effect on the VLCC market", the shipbroker noted.

On a more fundamental level, "there is a growing opinion between oil industry practitioners that oil markets are likely to remain oversupplied well into 2017. There are a number of reasons for that, including growing prospects for Nigerian, Caspian and Libyan crude production. The resilience of the US shale industry has prompted a number of leading oil consultancies to revise up their expectations for US crude oil production. The IEA has also voiced concerns of slowing demand growth in key markets, which together with anticipated increases in crude output, points to a sizable excess in supply over demand at least through the 1st half of 2017. If these forecasts are correct, the impact on the tanker market will largely be positive, at least in the short term. Tanker demand will benefit from incremental growth in crude exports, while oversupplied oil markets increase the likelihood of continued operational and forced tanker storage. Yet, as is always the case with forecasts, there are uncertainties. One of the most immediate risks is a possible crude oil production freeze deal between a number of crude exporters, with a decision expected in less than a week. The question here is whether the countries like Nigeria, Kazakhstan and Libya, where the near term prospects for production gains are the strongest, agree to participate", Gibson concluded.

Meanwhile, in the crude tanker market this week, in the Middle East, Gibson said that "VLCCs saw more as the week progressed, but failed to shake off the holiday lethargy that had set solidly in last week. That said, a steady/busy Atlantic scene, and a widespread improvement in Suezmax fortunes, has started to harden sentiment, and perhaps a busier pre Chinese holiday week to come will start to shift the rate needle upwards somewhat over the coming period. Rates, for now, remain in the low ws 30s East, and low ws 20s West. Suezmaxes did make some upward progress to around ws 60 to the East and ws 40 West but noticeably underperformed against their peers in West Africa, and the Med. Ballasting from the region is already underway, and a finer balance may eventually work to Owners' advantage. Aframaxes held their recent bottom line - 80,000 by ws 60 to Singapore, and Owners are seeking small premiums now for the privilege of fixing upon more forward datesbaby steps".

Source: Hellenic Shipping News Worldwide