Fixtures cast doubts on oil cuts

VLCC

The results of counting the number of fixtures for VLCCs loading in the Gulf in January appear to disprove theories about cutbacks in Opec crude oil production.

These theories suggested such cutbacks would reduce the amount of oil being shipped out of the area. With more than 100 vessels already concluded for January, this looks more like a normal month's business.

This "normal" month, however, has seen downward pressure exerted on freight rates and a continuing slide in income levels.

The large number of fixtures concluded on Friday brought this slide to a halt. One feels that the market has stabilised at about Worldscale 80 for Eastern discharge, and WS70 for Western destinations.

Single-hull tankers would see rates about 5 points lower. In the Western Hemisphere, the tonnage supply looks thinner than in recent times. One gets the feeling rates higher than of late will prevail over the next week or so. Suezmax rates are on the way down, but probably not to such an extent they pose a threat to VLCC business.

Suezmax

Short voyages appear to have been more popular last week from the Gulf with many fixtures being concluded to India. Rate levels have followed VLCC rates downwards and Indian voyages have fallen to about WS125.

Although the fall in VLCC rates has probably been arrested from West Africa, Suezmax rates are still on a downwards slope and have gone below WS200 for the first time for some weeks. WS190 has been reported for a voyage from West Africa to Spain and voyages from West Africa to the United States will probably follow and reach this level shortly.

There has been little activity for Suezmax vessels from the eastern Mediterranean and Black Sea areas and freight rates for liftings from this area have also fallen below WS200. The North Sea and Baltic Sea have seen few fixtures reported with rates of WS175 being concluded for voyages to the US Gulf and WS 195 to the Mediterranean.

Aframax

Mention was made a week ago of fixtures dropping into a band of between WS180 and 220. This became a self-fulfilling prophesy as rates fell to WS185 to WS190 for voyages from the Gulf to the Far East. Rates from Indon-esia also fell to end the week at about the WS175 level for a typical Indonesia/Japan voyage. It will be interesting to see if the market will bottom out next week.

In the Mediterranean, the tonnage supply has been more than ample and rates have more than halved from WS300 in the middle of December to WS140 for a current cross-Mediterranean voyage.

Also the increase in the number of transits the Turkish auth-orities are allowing through the Bosphorus and Dardanelles has sharply reduced delays in this choke point, thus increasing tonnage availability.

In northwest Europe, the tonnage supply was also more than adequate and rates for a normal 80,000 ton cargo have dropped down to WS175.

The North Sea market may well bottom out, as currently gale-force winds are battering my windows. This usually causes delays at this time of year.

Rates for Ice-class tonnage have held up better and WS435 was still the prevailing level as the week closed.

In the Caribbean and the East Coast of Mexico, the usual 70,000 ton cargo has been fixed at about the WS350 level, a slight easing in what has recently become a firm market. Fog in the US Gulf, however, has slowed traffic down and this market may well firm up again.

The writer is a shipbroker and marine consultant with more than 40 years' experience in the tanker and dry cargo markets.