Product tanker earnings are suffering a sharp drop in the Atlantic basin as oil companies expect a vital fuel artery to resume operations by the weekend.
The 2.5m-barrel-per-day Colonial Pipeline have been shut following a cyberattack on Friday, but its operator and government officials expect most of its operations to be restored within this week.
“If indeed it is coming back on Saturday, then, unfortunately, it's a non-event for the market,” Andrew Wilson, research head at shipbroker BRS, said.
“We've had a couple of days of excitement, then it's going to come crashing back down to earth.”
The 8,851-km pipeline system transports gasoline and distillates from refineries on the US Gulf Coast to the Atlantic coast.
After the pipeline fell victim to cyber criminals, traders and oil majors rushed out to fix vessels to lift excess US Gulf barrels and ship European refined products to the Atlantic coast.
But many of those preliminary fixtures failed to materialise after Colonial’s operator on Monday indicated its operations can be largely resumed within days.
Kpler data showed the fixtures of six MRs and one LR1 for lifting from the US Gulf were cancelled between Monday and Wednesday.
Three MR and three LR2 fixtures for transporting European products to the US were also not finalised, according to Bloomberg data.
Those included the 36,200-dwt Torm Gyda (built 2009), which had been tentatively fixed by Clearlake Shipping for prompt lifting at Worldscale 145.
Torm chief executive Jacob Meldgaard declined to comment on the charter.
But he said: “Where we see the most [market] effects are in the US Gulf and east coast areas, and to a lesser degree on the Continental side.
“The expectation currently is that the Colonial Pipeline situation will be resolved by end of this week, and we expect then the market will normalise.”
Spot MR earnings on the TC18 US Gulf-Brazil had spiked from $7,030 per day on Friday to $20,246 on Tuesday, before easing back to $15,615 on Wednesday, the Baltic Exchange estimated.
MR earnings for the TC14 trade from the US Gulf to north-west dropped from $10,267 per day on Tuesday to $8,443 on Wednesday, which was still much higher than -$65 last Friday.
Earnings of the same class of ships on the TC2 route from north-west Europe to the US Atlantic coast had jumped from $5,591 per day on Friday to $10,833 on Monday before sliding to $8,194 on Wednesday.
“Assuming that the pipeline operator is correct, flows will soon resume — and those pipeline flows will arrive before new TC2 fixtures would discharge,” Gibson Shipbrokers research head Richard Matthews said.
