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Saturday, September 22, 2018

VLCC spot fixing in July the busiest ever!

According to the database maintained by Geneva-based broker Marinav, VLCC spot fixing in July has been the busiest ever for VLCC fixtures from the Middle East. 115 VLCC fixtures were concluded for July compared to 110 in 2005 and 108 in July 2004. Braemar Seascope reports 50 VLCC fixtures last week, but only 13 fixtures concluded this week, bringing the August total, so far, to 91. This has also been reflected in strong freight rates, which peaked last Friday but which this week have started showing signs of abating. 

Click herefor VLCC fixture statistics.

The U.S. has in recent years been a strong driver in the tanker market. Imports so far this year have amounted to 10.1 mbd, which is slightly below the average level in 2005. Gasoline imports to the U.S. have on the other hand been record high: 1.2 mbd compared to 1.1 in 2005 and 0.9 mbd in 2004. So oil imports to the U.S. have not been the main driver of the VLCC market. North America is projected to increase oil consumption by 0.4 mbd in 2007, which is about the same as the projected supply increase. 

Recent figures are not so readily available for other areas. However, the Clarkson VLCC fixtures statistics suggest that it has actually been the activity AG-East that has increased. S. Korea is reported to have reduced oil consumption by 0.8% to 1.97 million b/d so far this year on high prices, but has increased crude oil imports and product exports. Japanese crude oil imports are up by some 4.5% for the first five months of the year. 

Looking at the oil supply side, OPEC production during the first half of 2006 has been 29.5 mbd compared to 29.9 mbd in 2005. The call on OPEC oil is projected to be 28.4 mbd in 2007, compared to 28.8 mbd in 2006 and 29 mbd in 2005. It should also be borne in mind that oil consumption in the Middle East is increasing strongly by 0.33 mbd in 2006 to 6.47 mbd. About the same increase is projected for 2007.  

Changing trade patterns involving increasing tonne-miles may be one of the reasons for the tight tanker market. Oil is increasingly being carried long haul from Latin America to Asia and West Africa to Asia 

We are also hearing reports of VLCCs being used for temporary storage. The competition for double hulled VLCCs seems to be stiff and there are still some 160 single hull VLCCs in the market.  

Scrapping so far this year has been less than two million dwt, which means that as little as four million dwt may be scrapped this year. This means that the fleet will increase by more than 20 m dwt, taking into account conversions.The fleet increase next year is expected to be 25 m dwt.  

Contact: Erik Ranheim