Product tanker owners are looking for a lift from the partial outage of Colonial Pipeline, the largest land-based transport system for oil products in the US.
The Baltic Exchange assessed the Atlantic basket rate for MRs at $18,997 per day on Tuesday, a three-week high and marginally up from $18,262 on Monday.
Spot earnings for the TC2_37 northwest Europe-US east coast route were $5,947 per day, a one-week high. Earnings for the US Gulf-northwest Europe were $13,397 per day, the highest since 23 July.
Market sentiment has been firm following a pipeline leakage near Huntersville, North Carolina on Friday, which the pipeline operator said led to a spill of 63,000 gallons of gasoline.
Colonial Pipeline has been operating at a reduced rate after the operator closed a section between Charlotte and Greensboro, Platts reported.
TradeWinds has approached the operator for further details on the pipeline operations.
When running normally, the 5,500-mile Colonial Pipeline can ship more than 2.5m barrels per day (bpd) of refined products from the US Gulf to locations near the Atlantic coast.
Its outage can often trigger a fuel shortage on the east coast, which in turn results in more imports and higher freight rates.
When the pipeline was shut due to Hurricane Harvey in August and September 2017, daily earnings on the TC2_37 route jumped by $18,600 within a week.
But some market players suggested that the pipeline issues this time may have relatively muted market impact, with gasoline stocks in the US still high due to lower-than-usual demand during the coronavirus pandemic.
The Energy Information Administration (EIA) estimated that gasoline stocks on the east coast reached 68.3m barrels as of 7 August, compared with the five-year average of 64.3m barrels.
The government agency expects gasoline consumption in the US to average 8.84m bpd in the third quarter, down from 9.49m bpd in the same period of 2019.
“Stocks are still very high and the driving season is almost over,” a broker said. “There has yet to be arbitrage movements as gasoline pricings have not really moved.”
Kpler data shows European gasoline exports to the US east coast are expected to amount to 194,000 bpd in the week beginning on Monday, down from 246,000 bpd last week.
LRs gain as crude tankers lose ground
Among other product tanker trades, LRs have maintained their recent strength on the Middle East Gulf (MEG)-Japan route due to easing oversupply of tonnage.
The TC1 earnings for LR2s were assessed at $14,399 per day, up $1,561 from Monday. The TC5 earnings for LR1s rose by $342 to $13,195 per day.
As for crude tankers, general market activity has been subdued with the production cut by the Opec and its Russia-led allies.
VLCC earnings on the TD3C MEG-China route lost $257 to $15,533 per day on Tuesday. Average suezmax earnings fell $551 to $8,911 per day, while average aframax earnings decreased by $403 to $5,795 per day.
“On the VLCC front, the market remained under the control of charterers,” Intermodal Research said in a note. “This can be attributed to reduced cargo availability coupled with overwhelming amounts of prompt tonnage in most regions.
“The suezmax sector underperformed the rest of the market…Aframax owners managed to put forth some resistance with rates for cross-Mediterranean trips showing substantial increases, however in retrospect, earnings remain at unhealthy levels.”
