According to preliminary data, OPEC spot fixtures rose by 0.4 mb/d to stand at 11.52 mb/d in September following a decline in the previous month. The gain in fixtures registered this month is mainly supported by the increase in Asia requirements as refineries partially returned from maintenance, despite the loss of Western requirements. Compared to the previous month, Middle East to East gained 0.9 mb/d to stand at 5.71 mb/d and Middle East to West declined by 0.22 mb/d to stand at 1.67 mb/d. However, global fixtures fell 1% or 0.12 mb/d compared to a month earlier to stand at 16.21 mb/d. Compared to a year ago, global\ fixtures lost 0.10 mb/d and OPEC fixtures gained 0.21 mb/d.
According to preliminary data, OPEC sailings gained 90 tb/d to stand at 22.67 mb/d in September, mainly driven by Middle East sailings. However, compared to the same month last year, OPEC sailings lost 0.53 mb/d in September. Initial estimates indicate that European and West Asian arrivals gained 0.66 mb/d and 0.19 mb/d respectively to stand at 12.31 mb/d and 4.68 mb/d. US and Far East arrivals decreased by 0.44 mb/d and 0.12 mb/d to stand at 8.67 mb/d and 8.18 mb/d. Lower seasonal demand was partially behind the decline in US arrivals, while lower Japanese imports were the main factor for the Far East decline, due to better weather conditions and lower requirements.
In September, the spot tanker market continued to be under pressure in all sectors. Increasing tonnage supply on the back of new tanker deliveries was behind the fundamental weakness of tanker rates. Lower seasonal demand in the West of Suez and declining floating storage added further pressure in September, despite reasonable liftings in East of Suez as refineries returned from maintenance. In the dirty market, VLCC spot freight rates declined 5%, Suezmax decreased 3% and Aframax dropped 8% in September compared to last month. Following the same pattern, East of Suez edged down 3% and West of Suez declined 2% in the clean tanker segment on tonnage availability, limited requirements as well as closing arbitrage. Compared to the same period last year, September VLCC, Suezmax and Aframax average rates were down 10%, 2% and 3% respectively in nominal terms. However,East of Suez and West of Suez clean tanker rates gained 4% and 8% respectively, during the same period.
In the VLCC sector, spot freight rates declined for the seventh consecutive month to close at WS41 points, down 5% compared to the previous month. Both Middle East to East and Middle East to West spot freight rates decreased by 6% and 5% respectively on fresh tonnage supply from new vessel deliveries, despite a reasonable liftings gain towards Asia. Lower US crude imports from the Middle East due to seasonal demand added further tonnage supply and further pressured West of Suez spot freight rates. The decline in both Middle East to East and Middle East to West spot freight rates added pressure on West Africa to East spot freight rates, which closed down 2% in September compared to last month. The weaker VLCC market was driven by fleet deliveries, declining floating storage and lower seasonal demand that left many ship owners to operate below break-even cost and consider laying-up vessels.
The Suezmax sector followed the same trend as the VLCC sector and declined 3% in September compared to the previous month. Continuing fresh tonnage supply, spillover effects from the VLCC sector, as well as the continuing problem of the Buzzard field production in North Sea all influenced the Suezmax sector and rates declined in response. These factors weighted mainly on Northwest Europe (NWE)/US Gulf Coast spot freight that dropped 9% in September compared to the previous month. However, West Africa/US Gulf Coast spot freight rates edged up 2% as some refineries returned from maintenance. Compared to the same month last year, both NWE /US Gulf Coast and West Africa/US Gulf Coast spot freight rates showed the same pattern in September with the latter increasing 6% and the former decreasing 9%.
The Aframax segment in the dirty market followed the same path as VLCC and Suezmax. Average Aframax spot freight rates lost 3% in September compared to the previous month and remained flat compared to the same month last year. East of Suez Aframax from Indonesia to East spot freight rates declined by 6%, driven by limited requirements and tonnage availability. In West of Suez, Caribbean/US East Coast spot freight rates lost 19% compared to last month, the lowest level in more than two years, mainly on lower trades, higher tonnage supply and bad weather conditions. Mediterranean/Mediterranean and Mediterranean/ NWE Aframax spot freight rates dropped 2% each. The declined on the Mediterranean market was mainly attributed to lower North African and Mediterranean tonnage requirements.
Clean tanker market sentiment was bearish in September after the small gain registered last month as spot freight rates declined 3% in September on average from the previous month. East of Suez clean spot freight rates lost 3% in September compared to the previous month to stand at WS145 points. In East of Suez, both Middle East to East and Singapore to East declined by 3% each on higher tonnage availability and lower tonnage demand. In West of Suez, Caribbean/US Gulf Coast and NWE/USEC – USGC clean spot freight rates declined by 10% and 1% respectively while Mediterranean/Mediterranean gained 4% and Mediterranean/ NWE gained 1.5% compared to last month. Lower imports of gasoline in Latin America is behind the drop of spot freights from Caribbean/US Gulf Coast while closed arbitrage and lower transatlantic trades pressured NWE/USEC– USGC rates to decline. The gains in clean spot freight rates in both Mediterranean/Mediterranean and Mediterranean/NWE routes were supported by higher product demand in North and West Africa as well as higher tonnage demand from the Black Sea.