As the third week of July unfolded, crude oil market rates continued to grapple with negative pressure, compounded by a noticeable increase in the supply of crude oil tankers. The demand for Very Large Crude Carriers (VLCC) tonne miles experienced a sharp decline since the second quarter, posing challenges for the industry. Looking ahead, the end of July holds the potential for optimism, contingent on the pivotal role of Chinese crude oil demand in shaping future market dynamics.A key highlight during this period has been India’s steadfast purchases of substantial volumes of Russian crude oil throughout the first half of the year. It remains to be seen whether July will surpass the previous year’s monthly volume of Russian crude oil levels to India, as depicted in the image above.

Additionally, an interesting development in the clean segment has been the unprecedented rise in monthly volumes of Russian clean oil products bound for Turkey, surpassing records from the past two years. This positive trend could augur well for a resurgence in firmness within the MR clean vessel tanker sizes. As the month progresses, close monitoring of these trends will be crucial for gaining insights into the market’s future trajectory.

Market Rates (WS)

‘Dirty’ WS​​​​ VLCC – Suezmax – Aframax Mixed

The third week of July began with a slow climb in the prices of VLCC MEG /China and Suez Wafr-Cont, while the downward pressure remains in the Aframax Med route.

VLCC MEG-China freight rates rose to 53.5 WS, up 2 points from the previous week, while the last peak was four weeks ago.

Suezmax freight rates for shipments from West Africa to continental Europe rose to 99WS, up 12 points from two weeks ago. In the Suez-Baltic-Med route, In the Suez-Baltic-Med route, rates were again below the 100WS mark, down 24 points from the week 25 peak.

Aframax Med freight rates fell to WS123, down 39% from the peak eight weeks ago.

‘Product’ WS

LR Weaker

LR2 AG freight rates dropped this week to levels below WS90, which is 20 lower than the beginning of the previous week, while the last high was recorded at week 26.

Panamax Weaker

Panamax Carib-to-USG rates are still below the WS200 mark from the previous week, down nearly 20% from the first week of July.

‘Clean’ WS

MR Firmer

MR1 rates for the Baltic continent held levels at 155WS, while there seems to be a firmer momentum towards the second half of July

MR2 rates for shipments from the continent to the U.S. stood at WS130, up nearly 50% from the end of the previous week.

SUPPLY

Supply Trend Lines for Key Load Areas

Dirty (#vessels) – Decreasing

The supply of crude oil tankers gave a picture of a downward trend for the opening of the third week of July, while the increase seems to persist for the Suezmax segment.

VLCC Ras Tanura: The current count is about 50 ships, which is 20 lower than the levels of the last week and when levels neared the annual average.

Suezmax Wafr: The current count is about 63 ships, which is 13 more than the levels of the last week and with a trend of a further increase in the coming days.

Aframax Primorsk: The current ship count has now dropped to the annual average of 34 ships, while it remains to be seen whether there will be a decrease to levels lower than the beginning of month.

Aframax Med Novo: The number of ships also followed the pattern of the annual average and stood at 12, which is 4 lower than the previous week.

’Clean’

LR2 (#vessels) – Increasing

MR1 (#vessels) – Decreasing

Clean LR2 AG Jubail: The current number of ships is currently 16, which is 4 more than the previous week.

Clean MR1 Algeria Skikda: The current ship count has now dropped to 37 ships, which is about 10 ships lower than the previous week and almost 3 ships more than the average for the year.​​​​​​

Demand

Summary of Tanker Demand per Ship Size & Segment

​​
‘Dirty’

Tonne Days Decreasing

Dirty tonne days: During the third week of July, there was a continued downward correction in the percentage increase in demand (tonne days) across all size classes of oil tankers. Notably, the VLCC segment experienced growth levels similar to those seen eight weeks ago. However, it remains uncertain how the end of the month will unfold, given that we are currently in the peak of the summer season.

‘Clean’

Tonne Days Panamax Decreasing / MR Increasing

Panamax tonne days: The third week of July saw a significant downward correction, while the last exceptional peak was almost ten weeks ago.

Clean MR tonne days: It now seems the first movement of upward revival in the demand tonne miles after the weak picture of the previous days in July, as remains to be seen whether Russian clean oil flows to the Black Sea will support a further increase in the coming
days.

Source: Signal Group, By Maria Bertzeletou