VLCC getting comfy?
After seeing a dramatic fall in rates over the past weeks TD3c seems to be settling around the mid WS30’s with the last day of Q2 seeing the years low at WS34.79, a 188.79pt drop from the year high of WS223.58 on 16th March. Freight rates also seem to be softening in correlation with the declining floating storage volumes, after hanging on to the last bit of hope they had in previous weeks, resulting in TCE earnings dropping below $20k/d. Hopefully with more stability in rates, this will increase confidence in the pricing curves.
Steady Storage Outflow
The steady decline in floating crude storage is still damaging the market. Most vessels seem to be storing in the Asian Pacific, but most of the discharging seems to be coming from the Middle East which is down 50% on the week. This leaves current levels as of 26th of June around 190MMbbl. At current offloading rates it can be estimated that floating storage will return to normal levels, around 50MMbl by sometime in September, which will once again over supply the vessel market.
Hope in Libya
The tanker market currently has a close eye on developments in Libya where the NOC are negotiating with the UN and US to lift the 5-month production blockade and restart exports. This is good news to Libya which holds Africa’s biggest crude reserves in the OPEC group, where production levels have been a tenth of those seen in January. This could bring good news to AFRA and SUEZ vessels where rates have also been softening. Hopefully, the blockade is lifted, and we start to see an increase in activity on AFRA and SUEZ rates.