OceanEXL – Weekly Tankers Market Commentary (Uke 15)

General:

The tanker market did not bother much with the Easter break, as we saw a healthy amount of activity across the board. It seems that we are now starting to find more stable ground, not only on period rates but also in the second-hand market. This comes after weeks of increasing prices which were kickstarted by the rapidly improving spot market.

Chartering and Spot market

There was a fair amount of activity in the period market this week. As we previously pointed out, we are seeing vessels fixed out for shorter and shorter periods, which is a clear indicator of how firm the market is. While we have been seeing steep increases in rates throughout the previous weeks, this week marked the first, where we began to see a more stable market as rates started to align with last done levels.

Second-hand market

The second-hand market is lively as always. The market is increasing fast and we see buyers trying to secure tonnage before the market potentially takes off, resulting in a healthy amount of transactions throughout the last couple of weeks.

We saw that second-hand prices followed the development of the spot market very fast, and it seems that sellers and buyers are just now starting to find common ground on what tonnage should cost. In total, we recorded over 20 transactions this week across second-hand and recycling.

Newbuilding market

No newbuilding orders were recorded this week.

Recycling market

Even though tankers have become an increasingly profitable segment to operate, we still see a few units going for recycling every week, which will have a healthy impact on the long-term market. The tanker fleet historically has been oversupplied with tonnage, which in the past has made it harder for Owners to run a profitable fleet when the market is not under extreme volatility.

Oil and futures market

WTI Crude (May contract): Settled at $106.95 and saw an increase of 9.24% w-o-w. Brent Crude (June contract): Settled at $111.70 and increased 9.08% w-o-w.

While Russian crude and gas continue to flow, some Buyers of Russia’s natural gas have agreed to pay in rubles for the discounted gas, such as Armenia. Hungary has also announced that they are prepared to pay in rubles for Russian natural gas.

Tanker rates continue to be affected by the ongoing war between Russia and Ukraine and the tensions between the West and Russia. Russian production has not seen any change since the invasion of Russia, suggesting that Russia is ready to sell its oil at any price. Production data from EIA shows that Russia had 11.3 mbpd of crude oil and liquid supply in February 2022 while that number was only slightly less at 11.28 mbpd in March 2022.

Russia’s Energy Minister Shulginov stated earlier this week that the federation is prepared to sell oil at almost any price to friendly nations. According to the International Energy Agency, the Western sanctions could reduce Russian exports by around 3 million barrels daily during this quarter.

OX-Global Shipping Indices

The OX-Global WET12 index saw an increase of 2.97 points or 2.27% w-o-w.

Servicing the maritime industry through technology, advanced intelligence and visionary shipbroking within multiple segments, specialized in asset trading, chartering, advisory services and capital markets.