*A tale of Two Arbs*
The end of last week saw some gaining interest in the U.S. Gulf amid the growing Asian naphtha complex, which saw naphtha being moved from the U.S to a hungry Asian market. European cargoes are usually sufficient enough to satisfy Asia’s appetite, but growth for naphtha within Europe resulted in a fall in Europe/Asia trade, allowing the U.S. to step in. Platts reported the first half of September alone has seen over 300kt of CPP shipped from the U.S. Gulf to Asia, expecting nearly 700kt will be lifted in total from the U.S. Gulf to Asia this month. As a result, MR tankers are finding greater employment in transatlantic trade flow, as LR1 vessels are experiencing a shortage of tonnage.
With both TC2 and TC14 MR routes bottoming out around mid-last week, we saw the TC2 spot drop 8.88 points on the day (16/09-17/09). As spot fell so did TCE seeing a low of around $6.5k and with these low rates we saw the TA gasoline arb briefly open. The potential of missing out on historically strong Q4 tanker rates in the US Gulf made it a tricky decision for charterers looking to take advantage of the periods which are so often affected by disruption. MR rates and spot slowly increased from their lows and TCE is now around the $10k a day mark meaning any arb opportunities are more than likely closed.
*Libya’s Comeback*
NOC (The Libyan National Oil Corporation) has finally lifted its ‘Force Majeure’ from certain secure facilities. This eight-month blockade saw armed guards protecting insecure ports and facilities in the region amid a civil war. The central bank reported this blocking of exports has cost Libya nearly $9bn in lost revenues so far this year. Some of Libya’s key oil fields are prepping for a restart along with certain ports re-opening, meaning NOC is now estimating that by next week production could be around 260kbpd, stating that vessels will arrive consecutively from today onwards to ship out the available crude in storage. If NOC manages to reach high levels of production and wish to export and not store their crude, this could provide a small boost to the tanker market. According to Tradewinds, the Trafigura operated Suezmax, Marlin Shikoku is on route to the newly opened port of Marsa al Hariga to load 1mmbl of Sarir crude, that had been purchased before the Force Majeure and then became locked in. It is currently not know how many more deals previously agreed will be able to collect their crude, but this along with increased exports may see a slight growth in tanker activity in the Mediterranean.