VLCC earnings have retreated from their multi-month high levels due to relets of oil firms and slowing charter activity.
The Baltic Exchange estimated spot earnings on the benchmark Middle East Gulf (MEG)-China route at $22,001 per day on Wednesday, compared with $24,511 per day on Monday, then a two-month high.
Brokers reported that ExxonMobil on Tuesday fixed the 307,000-dwt Neptun (built 2007) on subjects to Vitol for a voyage from the MEG to Singapore at Worldscale 29.5, with a loading date between 28 and 30 September.
The US major is believed to have chartered the vessel from Euronav, which in 2017 sold it to Wafra Capital Partners in a five-year leaseback deal.
Relets have driven down freight earnings lately as charterers with an “owner’s hat” are not being “too fussed” when letting the ships out, Fearnleys said in a note.
“With no lack of available tonnage, we’re likely still in for a bumpy ride going forward,” the Norwegian brokerage added.
Enquiries over floating storage have cooled down after more than a dozen crude and product tankers — including at least 10 VLCCs — were fixed on short charters last week.
Some market participants suggested not many of those vessels would be actually used to store oil, with the oil contango likely not wide enough in relation to charter rates.
“It was just smoke without fire … not worthy of any excitement,” said a broker.
If not used for floating storage, vessels taken on time charters would be released back into spot trading and add to the tonnage list.
General weakness
Aframax and suezmax earnings have continued to hover close to their multi-year lows this month, unaffected by earlier chatter over storage demand.
Average aframax earnings were $4,681 per day on Wednesday, down more than $2,000 from the beginning of September.
“Rates in the aframax sector suffered additional discounts, with the Baltic region setting the negative tone as oversupply of tonnage in the region did not provide any room for resistance,” Greek broker Intermodal noted.
Pressured by oversupply in West African, average suezmax earnings fell to $3,631 per day from $4,658 per day in early September.
With renewed demand weakness amid a second wave of coronavirus, Opec and its Russia-led allies are set to maintain their product cuts of 7.7m barrels per day until the end of the year.
Reuters reported Opec+ achieved a high compliance level of 101% with the output agreement last month, citing unnamed sources within the group.
Most tanker players agreed that production cuts would plague tanker rates in the coming months.
