The rarefied, volatile VLCC peak has dropped from record $300,000 a day territory and is close to ducking back under $100,000 in the next 24 hours as charterers cancelled a swathe of tankers that had been booked on subs at all-time high prices.
Latest spot rates for VLCCs are now being done for around $113,000 a day, a still very healthy rate as the tanker market now becomes what one broker described as “a game of chicken” with charterers stepping back and yet there is a huge number of cargoes that need to fixed in the coming week.
“The collapse in refinery margins is the major reason behind all the cancellations,” commented Joakim Hannisdahl from Cleaves Securities.
Fearnleys noted in its most recent weekly report: “After having had a sniff at rates yielding upwards to USD 300k in daily earnings owners were brought back to earth this week, in a manner of speaking, with everything done at above ws205 (USD 200k/day) failing subjects. That said, the latter is earnings not seen for decades, so nevertheless a significant improvement from the previous week.”
With all these failings, plus additional oil company relets added, the position list has widened, balancing the supply/demand picture. However, Fearnleys suggested the underlying fundamentals remain strong, which will support a much higher floor for the balance of the year.