The VLCC market appears on the upswing, helped along by falling oil prices and Middle East sunshine.
Rates have started peeking up over the last week, enough for Fearnleys to argue that they had “turned the corner at the end of last week … albeit baby steps” as owners and charterers congregate in the United Arab Emirates for Bahri Week.
“Most of the activity this week has been dictated by the events in Dubai, with deals being struck on a private basis,” the Norwegian broker said in its weekly note.
“However, owners have shrewdly made sure to leak rates and fixtures supporting a further climb.”
It quoted Middle East to Japan rates at roughly Worldscale 52.5, with ships sailing to Singapore earning slightly more, at WS 53.5.
Both were 2.5-point improvements over last week.
Fearnleys also noted that weak oil prices — with Brent crude priced at $72.33 per barrel on Thursday and West Texas Intermediate at $68.46 per barrel — had boosted West-to-East runs, with ships plying that trade earning WS 33.5, a 4.5-point improvement week on week.
The increases were also noted by Clarksons, which saw its VLCC fleet weighted average shoot up 4.3% from last week to $35,100 per day.
The broker assessed Middle East to China rates at $31,900 per day, up 8.1% from last week, and West Africa to China rates at $35,900 per day, up 7.1% over the same period.
The only route to see a dip was the US Gulf to China, which came in at $35,000 per day, a 5.9% drop.
VLCCs have been struggling to meet the lofty second-half expectations due to depressed Chinese oil demand and Opec delaying planned production hikes.
Fearnleys pointed out that despite the recent upturn the market was still behind its typical season track, with owners feeling a time crunch to push the market higher before the holiday season starts.
“We’re still a far cry from a typical strong winter market, but owners will do their utmost to break through the ‘glass ceiling’ before Christmas celebrations set in,” it said.
