Product tanker markets are showing signs of strain as demand shrinks amid industry reports of falling exports from the US and Middle East.
Global average spot long-range two tanker earnings have fallen by 52.4% over the past week to $62,900 per day, according to Clarksons Platou Securities.
LR1 tankers have fallen by 36.3% to $53,000 per day, and medium-tankers have seen their spot earnings slump 27.4% to $29,700 per day,
“The market is a dreadful reading. It looks like it’s the classic case of where there are too many ships chasing too few cargoes,” said the firm, which is the investment banking division of shipbroker Clarksons.
Kpler data showed the amount of clean petroleum products on water globally fell to 407m barrels on Thursday from 416m barrels in early May, suggesting a fall in overall fleet utilisation.
The development has come as the US is expected to export just 840,000 tonnes of products this week, compared with a four-week moving average of 1.37m tonnes.
Domestic demand in the US has started to recover as the world’s second largest energy consumer relaxes lockdown measures, according to industry experts.
The International Energy Agency has revised up its forecast US gasoline demand in May and June, saying “a significant rebound was observed in the latest data”.
The country’s gasoline stocks amounted to 253m barrels on 8 May, down 3.5m barrels over the past seven days, according to the Energy Information Administration.
“The market is watching closely for nascent signs of road fuel demand recovery as the US eases certain lockdown restrictions” ahead of the driving season, data research firm Vortexa said.
Separately, Platts reported at least six spot fixtures of LR tankers were recently cancelled after Middle Eastern refineries reduced throughput amid further reduction in crude output.
Those vessels, which had been booked to ship gasoil and jet fuel from the Middle East to Europe, were released back into spot trading and pressuring earnings.
Fewer cargoes from Middle East should help ease congestion at oil terminals in Europe, where demand for middle distillates has collapsed during the coronavirus pandemic, according to Platts.
Further looking, some players expect further downside to tanker earnings, with limited cargo enquiry for the rest of this month.
“Our brokers expect rates to go further down from here,” Clarksons Platou said.
