Crude tanker rates are dropping, but remain at a “healthy” level, analysts say.
Spot charter rates have seen big drops from the two-year highs reached in late November and December — with suezmax rates falling by more than half — thanks to Opec production cuts and Saudi Arabia looking to further cut exports.
The Baltic Exchange's assessment of time-charter equivalent rates for VLCCs, for example, reached its lowest level since 24 October.
But the rates are still considerably higher than what was seen in early 2018, which appears to have tempered pessimism.
“While Opec cuts have certainly weighed on sentiment (and the stocks), owners continue to enjoy a very solid rate environment despite news that Saudi cuts are surprising to the upside,” said Deutsche Bank analyst Amit Mehrotra in a note Tuesday morning.
“The resiliency in the time charter market indicates that the market expect crude tanker markets to remain at healthy levels in 2019 despite Opec production cuts.”
At recent heights, suezmaxes were being chartered at $54,802 per day, sframaxes at $44,167 per day and VLCCs at $35,772 per day, according to the Baltic Exchange.
Tuesday, rates had fallen to $38,661 day for suezmaxes, $28,902 per day for aframaxes and $16,988 per day for VLCCs.
Arctic Securities’ Ole-Rikard Hammer said rates were “softening at the margin”.
“VLCC activity appears relatively healthy but softer undertone for rates,” he wrote.
Falling Saudi Arabian oil production, plus reports the kingdom would cut exports furtehr, were “unhelpful for owner confidence” but not new, Hammer wrote.
“On the bridge side, the quicker inventories are balanced, the quicker the return to normal trading conditions.”
