The Atlantic product tanker market rally has fizzled out amid slowing MR chartering activity, with refineries in Texas gradually resuming operations.
Clarksons Platou Securities assessed spot MR earnings for journeys from north-western Europe to the US Atlantic coast route at $9,300 per day on Tuesday. That is down from $11,600 per day on 18 February, which was a multi-month high.
Downward pressure
The previous spike came after oil traders rushed to ship European diesel to the US, where Arctic weather forced large refining capacity offline in Texas and boosted refined product prices across the country.
But arbitrage economics have weakened due to higher freight rates, and brokers said charterers are now staying on the sidelines.
Of the four MRs tentatively fixed at Worldscale 160 or above last week, just one eventually materialised, according to Kpler data.
Equinor fully fixed Champion Tankers’ 47,200-dwt Thelma Victory (built 2004) at WS 163 for prompt lifting from Mongstad in Norway, the data showed.
Analysts predict more downward pressure on MRs in north-western Europe because of rising tonnage supply and fewer shipments to the US, despite West Africa-bound fixtures still being done at high rates.
Lower output
The US is expected to need less European supply of refined products, with Texas refineries coming back online after brief shutdowns last week.
Argus Media estimated 2.3m barrels per day (bpd) of refining capacity was being restarted as of Monday. More than 5.1m bpd of capacity had been taken offline last week, with sub-freezing conditions forcing electricity curtailments.
In addition, European refiners will probably have less availability for diesel exports due to lower output and demand recovery, Vortexa’s senior freight analyst, Arthur Richier, told TradeWinds.
“There is going to be quite heavy European spring refinery maintenance,” he said. “If lockdown rules are getting relaxed and there’s a spur in European diesel consumption, that’s going to turn off those taps. I don’t foresee any diesel, or as much diesel, going to the US.”
Despite being short of middle distillates such as gasoil, Europe has been shipping out large quantities of those products in recent months due to high stocks.
Kpler data shows European exports of diesel and gasoil to the US are expected to reach 191,000 bpd this month — the second-highest on record.
