Product tankers are enjoying a strong rally in north-west Europe as charterers rush to fix MR vessels for shipments to the US.
Icy blasts from the Arctic have been sweeping across the US over the past week, forcing large refining capacity offline and boosting refined product prices.
“We saw traders fixing diesel on MRs to go to the States early this week, along with the usual gasoline volumes,” Gibson Shipbrokers research head Richard Matthews said.
“The extra diesel cargoes pushed up rates given that the tonnage list had already tightened up a bit."
Spot MR earnings on the TC2 north-west Europe-US Atlantic coast route has risen above $10,000 per day for the first time since September, according to the Baltic Exchange. The time charter equivalent assessment was $5,336 per day last Friday.
Traders and oil majors have come out in droves to take vessels for this trade, with 14 MRs fully or preliminary fixed between Monday and Wednesday, Kpler data shows.
ExxonMobil chartered Yasa Tanker’s 49,000-dwt Yasa Swan (built 2019) at Worldscale (WS) 160 — one of the highest rates seen this year — for lifting between 24 and 25 February.
The market momentum has continued on Thursday, with another preliminary fixture reported to have been done at WS 172.5.
Supply gap
Cross-Atlantic arbitrage flows of gasoline and diesel are expected to be strong in the short term due to high stocks in Europe and reduced production in the US.
Platts estimated that 2.4m barrels per day (bpd) of refining capacity was offline in Texas as of Wednesday, due to extremely cold weather.
The Lone Star State, which has nearly one-third of the refining capacity in the US, supplies the Atlantic coast via the 2.5m-bpd Colonial Pipeline.
However, there have also been reports of port closures during the cold snap, adding pressure on the already-weak US Gulf tanker market.
The Baltic Exchange assessed MR earnings on the US Gulf-north-west Europe route at a two-month low of -$3,256 per day amid little activity.
With the polar vortex pushing through North America, the National Weather Service expects large swathes of the US to experience snow and ice in the coming days.
“Abnormally cold temperatures will hang around through [to] the end of the work-week,” the government agency said.
“Record cold daily maximum and minimum temperatures are likely to transpire in the South Central US through [to the end of] Saturday morning.”
