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31 Mar 2009
Estimates that OPEC compliance with a 4.2 million barrels per day (bpd) supply cut has fallen back to 75% in March is casting a shadow over the crude oil tanker markets, with spot rates already at record lows. “It is disturbing for owners to accept the fact that so much more crude is yet to be taken out from the market, when activity is already
so low,” said an industry player to Tankerworld.
“It would be much more acceptable if rates were where they are due to
90% to full compliance. But 75% means we are in for more downward
pressure on rates as tonnage goes into over-supply.”
According to a Singapore-based broker, “there is no bottom in sight for
VLCC spot rates currently and many owners are not breaking even.”
“OPEC is supposedly trying its best to cut 4.2 million bpd from the
market. Full compliance is equivalent to at least two VLCCs out of a
job everyday.”
Tankerworld reported Monday that latest data from Geneva-based oil data
consultants Petro-Logistics indicates that OPEC's compliance with its
own targets is weakening.
According to Petro-Logistics, OPEC output in March is expected to
average around 1 million bpd above its collective target of 24.84
million bpd, which took effect from January 1, as Iran and some other
members pump above agreed levels.
One billion barrels is what one suezmax can carry on average.
According to Reuters, this estimate implies the oil cartel delivered in
March some 75% of the 4.2 million bpd of reductions agreed since last
September, less than the 80-90% estimated by several indications for
February.
Brokers tell Tankerworld that crude oil tanker markets are getting slammed by OPEC supply cuts and weakening global oil demand.
VLCC spot rates for example are continuing to slide on all routes against a background of falling activity.
“How low can you go? That's been the question in the VLCC market this
week. The answer is lower than you think,” said Bassøe last Friday.
MEG-East voyages are being fixed around WS 35 at present while the
benchmark MEG-UKC route for MEG-West voyages sunk to a new low of WS
22.5.
The rate of WS 35 for MEG-East voyages is at a seven-year low.
Suezmax rates meanwhile, for West African crude, has reportedly sunk to
a 10-year low of around WS 57 on the back of little to no cargo
requirements.
Very limited activity has also been reported in the Mediterranean and
Black Sea spot suezmax markets, and some brokers were even quoted
claiming that there were no suezmax fixtures in the region at all last
week.
The benchmark Novorossiysk-Augusta route lost some 15 Worldscale points last week to hover around WS 70 at present.
According to Gibson, rates could be expected to dip even further as there are “no positive indicators on the horizon.”
Source: TankerWorld