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In September, estimated OPEC spot fixtures showed a decline of nearly 0.5 mb/d or 3.7% toaverage 12.3 mb/d. OPEC fixtures have fallen for the third consecutive month, although the losswas lower than the 0.9 mb/d displayed during the previous two months. However, compared to ayear earlier, OPEC spot fixtures were around 2 mb/d lower. The drop in spot fixtures came as aresult of the combination of a decline in OPEC production and a slowdown in demand. Despitethis decline, OPEC’s share in total fixtures rebounded by 3 percentage points to 67%, similar tothe July level, indicating that non-OPEC spot fixtures experienced a stronger decline relative toOPEC. Middle East eastbound fixtures (including non-OPEC members) rose 0.7 mb/d or 15% to5.6 mb/d, while westbound fixtures fell 0.3 mb/d or 17% to stand at 1.5 mb/d, the lowest level sofar this year. The increase in eastbound fixtures was due to particularly strong bookings fromChina and Japan.
Non-OPEC spot fixtures fell 1.0 mb/d or 14% to average 6.1 mb/d, which was 1.5 mb/d below ayear earlier. As a result, total global spot fixtures dropped 1.5 mb/d to average 18.4 mb/d, thelowest level so far this year. OPEC sailings rose nearly 1.0 mb/d to 23.9 mb/d, but remained0.5 b/d below the September 2005 figures. Sailings from the Middle East showed some recoveryand increased 0.1 mb/d compared to a decline of 1.2 mb/d in the previous month to stand at17.6 mb/d. Preliminary data shows that arrivals at the US Gulf and East Coast and the Caribbeandeclined for the first time since May 2006 to average 10.2 mb/d in September, whichcorresponded to 0.5 mb/d less than the previous month while arrivals in North-West Europe fellby less than 0.1 mb/d to 7.6 mb/d. In contrast, arrivals at the Euro-Mediterranean basinwitnessed an increase of more than 0.2 mb/d to average nearly 4.6 mb/d, the highest level in thelast four months.
The crude oil tanker market showed a mixed pattern in September with the VLCC sectorremaining strong and Suezmax and Aframax softening on most routes. Spot freight rates forVLCCs trading on the Middle East/eastbound long-haul route fell a marginal 8 points to averageWS124 while Middle East/westbound rates stayed stable at WS97, the second highest level in2006 after February, displaying a 17% y-o-y growth. Despite the decline, rates on the MiddleEast/eastbound route showed y-o-y growth of 40% and they were even better than in thecorresponding month of 2004 where rates hit their historical yearly high level. The performanceof the VLCC sector in the Middle East was attributed to tight tonnage as tankers getting fixed toAsia and USA remained firm. The healthy activity to Asia, for instance, was reflected in thenumber of fixtures which averaged 78 in September against 72 in the previous month.
In contrast to the VLCC sector, fewer enquiries resulting in plentiful supply exerted downwardpressure on the Suezmax market where rates lost between 15% and 20% depending on the route.The West Africa/US Gulf Coast route saw rates average WS140, representing a drop of 35 pointsbelow the previous month due to the decline in fixtures, which went from 60 in August to 44 inSeptember, essentially due to disruptions to Nigeria’s exports. Nevertheless, freight ratesstrengthened during the fourth week due to limited tonnage following robust strong demand for West African crude, resulting in an increase in rates of more than 20% on this route. Behavingsimilarly, freight rates on the transatlantic route dropped 25 points to WS143 amid limited trade.For instance, in September almost 75% of North Sea Brent crude remained in North-WestEurope while 25% was exported to the USA. This contrasted the 42% that was exported to theUSA in August. Nevertheless, in y-o-y terms freight rates on both routes were around 20 pointshigher. The Aframax tanker market showed mixed movement with rates on the Indonesia/USWest Coast route continuing their upward trend, gaining 11 points to settle at a monthly averageof WS234. Rates for the rest of the routes weakened on the back of lower activity, especially onthe cross-Mediterranean and the Caribbean/US East Coast routes. However, average ratescontinued to decline for the fourth consecutive month on the Caribbean/US West Coast route,dropping 33 points to average WS172. The decline was due to a lack of demand from chartererswhich was reflected in the number of fixtures which fell by 15 compared to the previous month.
In the Mediterranean Basin and from there to North-West Europe, rates lost around 40 points or22% to stand at WS142-144 due to a lack of tanker chartering interest. It is worth noting thatintra-Mediterranean rates in September reached their lowest level so far this year while on theMediterranean/North-West Europe route, rates hit the second-lowest level after March. With theexception of the Indonesia/US West Coast route, all the routes in the Aframax sector wereweaker than a year earlier.
In the product tanker market, freight rates retreated from their extremely high levels but stillremained very attractive to ship-owners. In the East of Suez, freight rates for tankers of 30,000-35,000 dwt moving between the Middle East or Singapore to Asia fell a slight 5% to averageWS259 and WS327 respectively due to lower chartering activity, supported by high distillatestocks. When compared to a year earlier, rates on both routes were 50 and 110 points lower, respectively.However, it should be noted that in September last year rates were driven by hurricanes Rita and Katrina and hit their historical highs. The weakness was more pronounced in the West where excess tonnage putmore pressure on ship-owners to accept lower rates, especially those doing business on the Caribbean andthe US Gulf Coast and the routes where rates plunged by around 80 points to WS266 and WS225 respectively. The sharp decline in freight rates for vessels moving to the USA can be attributed to thin trade as the gasoline season came to an end. In addition, the switch from fuel oil to natural gas in the powergeneration sector following the decline in natural gas prices also contributed to the slowing oftrade and as consequence the decrease of freight rates. In the Mediterranean Basin and fromthere to North-West Europe, freight rates have been declining throughout the month and lost32 points or 12% on average to stand at WS231 and WS241 as tonnage availability has beengradually increasing. In addition, the expected heavy petrochemical autumn maintenance seasonin Western Europe, which could involve up to 15%, contributed to the weakness in the cleanmarket in Europe.
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