General Comments on the Market
Crude tanker freight rates declined in Jan / Feb’08 from the near record highs of Dec’07. Fixture activity was slower during January as a result of the holiday period and partly due to some refiners cutting back on runs in response to weaker refining margins. Unforeseen outages and oil field maintenance in Nigeria and a decline in North Sea and Russian output during February put further downwards pressure on crude tanker rates.
Product tanker freight rates strengthened in Jan’08 as low product stock levels in the US led to the opening of the trans Atlantic (UKC-US) arbitrage window. This was reversed in Feb’08 as a build up of gasoline stocks in the US and strong product prices in Europe limited trans Atlantic arbitrage opportunities.
In its latest report the International Energy Agency (IEA) reduced its 2008 oil demand forecast to 87.5 mb/d due to a downward adjustment in OECD growth. Overall oil demand growth for 2008 is forecast at 1.7 mb/d (+2.0%) led by China and the Middle East. Despite the reduction in their forecast the IEA oil demand growth outlook for 2008 remains higher than the US Department of Energy (1.3 mbd) and OPEC (1.2 mb/d).
Time-Charter Market
TMT of Taiwan continued to feature prominently as an in-charterer of VLCCs taking 11 x VLCCs on charter during Jan / Feb’08 (periods ranging from 2-3 months to 3 years). They now control an existing fleet of ~25 VLCCs and have 14 VLCC newbuildings on order. Apart from this the overall volume of time charter fixtures remained low as a result of the disconnect between owners’ / charterers’ rate ideas.
Click here to download a printer-friendly version of this article.
| Legend | |
| OPEC | Organization of the Petroleum Exporting Countries |
| NB | Newbuilding |
| mb/d | Millions of barrels per day |
| VLCC | Very Large Crude Carrier |
| OECD | Organisation for Economic Co-operation and Development | |
| mdwt | Million Deadweight |
| MEG | Middle East Gulf |