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Oil prices drifted in November. The WTI January contract started the month at around $85 per barrel but was closer to $75 by the end of the month. Brent slid through November from around $87 to $81 by Thanksgiving. Mexican crude fell from around $78 to $73 over the same dates. The OPEC basket started November at $88 and via two troughs and two peaks was $84 on November 24. Dubai Blend fell from $90 to $84 between November 1 and 24. There is a clear discount for barrels bought from the Atlantic, encouraging traders to lift barrels in the US Gulf and sail them eastwards. Thus the Baltic Exchange’s TD 22 index, rating VLCC freight rates from the US Gulf to China, added 16% over the 30 days to November 24. That meant a rise in lumpsum rates from $9.4m to $10.2m and a time charter equivalent (TCE) increase from $39,180 to $45,400. The average in November to date of $28,339 is the highest since June’s $29,128 but has some way to go to match the November 2022 average of $56,468. Still, VLCC TCEs rose even more on the Middle East to China voyage, gaining 68% in the 30 days to November 24, from $26,442 to $44,376. The monthly average for November to date of $48,697 is the best since $48,973 in April but again well behind November 2022’s average of $78,956. Daily hire equivalents for VLCCs sailing from the Middle East to Singapore peaked even higher at $59,215 on November 17 before falling back to $45,835 a few days later. The VLCC market is still not in supercycle territory; indeed its recent movements are squarely within its seasonal pattern after underperforming in August, September and October. Year-to-date average VLCC earnings, basis Baltic Exchange data, are $22,705 compared to just $3,200 in 2022 and $-7,914 in 2021 and $24,288 in 2019 before the pandemic disrupted global oil markets so hugely. As usual, broker assessments of TCEs are well above the Baltic data with rates on the Middle East to Far East voyage reported to have peaked at around $63,000 in mid-November having finished October at more like $38,000. As November draws to a close daily hire for modern, scrubber fitted tonnage is still around $50,000 per day basis broker reports The suezmax market peaked earlier in November with earnings for modern, eco-fitted tonnage sailing from West Africa to Europe reported at over $78,000 a day in the first week of the month. They have subsequently plummeted to around $28,500 a day as the supply : demand balance has edged away from owners and as the discount from using 3.5% sulphur fuel oil and a scrubber compared to burning VLSFO has reduced due to falling crude prices. The Baltic Exchange S2 average stood at $50,481 on November 24, down 16% over 30 days, though he monthly average for November to date of $60.227 represents the best month since March this year. Aframax earnings were down 27% on November 24 compared to October 24 but the half million barrel ships still enjoyed some upside in November, when earnings reached over $70,000 a day tracking the larger crude oil tankers. The North Sea / UK was the best performing region for afras in November with earnings up 5% in the 30 days to November 24, but as Germany fell into recession, rates from the North Sea to Northwest Europe fell 36% from their unusually high peak of over $103,000 recorded in late October. The monthly global average smooths regional volatility and shows $63,238 for November to date, ahead of both the suezmax and VLCC average and the best monthly performance since March this year though behind the November 2022 average of $88,712. Aframaxes remain the sweet spot for crude oil tanker buyers, while the equity analysts remain fixated on VLCC operators. In the clean tanker market, there were clear differences between the Atlantic and the Pacific in November, particularly for MR tankers. The MR Atlantic basket rose by about 2.5 times in 30 days to November 24, from $19,000 to nearly $50,000. This was led by a spectacular rise in rates for gasoil cargos from the US Gulf to Europe from $3,100 on October 20 to $35,400 on November 21 before Thanksgiving. On the reverse route, MRs carrying gasoline from ARA to New York enjoyed a threefold increase in earnings from a low of $9,600 on October 23 to a high of nearly $27,000 on November 7, though they fell back to $20,000 by Thanksgiving. Demand and earnings may return after the US holiday as US gasoline inventories are reported as down 10 million barrels in November compared to October. Delays at the Panama Canal have been driving up rates in the Caribbean with MRs sailing south from the USG enjoying a spike in daily hire in November with $87,000 a day being seen in late November compared to a low of $30,000 in mid-month and a year to date average of around $34,500. Meanwhile in the Pacific, MRs loading in South Korea earned about 30% less in late November than a month earlier, with the Baltic reporting daily TCEs from South Korea to Australia falling from $26,000 or so in late October to only around $16,400 a month later. TCEs on the shorter voyage to Singapore fell further from around $20,000 to $8,700 over a similar period. MRs carrying gasoline from Jamnagar to Chiba were rated at $12,860 by the Baltic on November 24 compared to $17,000 a day a month earlier, having earlier peaked at over $20,000 in mid-September. On the LR2 benchmark TC1 route from the Middle East to Japan, daily hire averaged $25,545 for the first 24 days of November basis the Baltic Exchange, down from $34,879 for October and $27,611 for September. Smaller LR1 ships on the same route suffered a halving of income in November from around $28,000 a day at the start of the month to $14,000 at the time of writing, averaging $18,800 compared to $26,800 in November and around $24,000 for the two preceding months. Japanese gasoline demand continues its long-term, terminal decline from its 2004 peak of around 1.1 Mn bpd to around 707,000 bpd in 2022 and perhaps below 680,000 bpd this year. Still, the strong Atlantic freight market led to an overall increase in the Baltic Clean Tanker Index of 5% to 829 points in the 30 days to November 24, while the Baltic Dirty Tanker Index lost 7% over the same dates as it came off its seasonal peak.

A tale of two tanker hemispheres

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