Tanker rates are on the up over the past few weeks, as the market is finding more and more support from different locations. VLCC rates remained firm through the first half of the week, said shipbroker Clarles R. Weber, “on owners’resistance and following a recent surge of West Africa fixtures which drew on Middle East positions and led to a tighter supply/demand profile. “Extremely light demand this week, however, weakened sentiment by the close of the week and led rates to erase the week’s earlier gains. The Middle East market extended last week’s demand slump; a total of 15 fixtures were reported, representing a weekly gain of one fixture but just 58% of the 52‐week average. In the West Africa market, just one fixture was reported, off by seven from last week’s tally and representing the lowest count in six months. The latter likely factored more heavily into the eroding of earlier sentiment given that participants are more accustomed to the Middle East market’s volatile weekly activity and mindful of the relative stability of monthly cargo programs”, said CR Weber.

According to the shipbroker, “by contrast, the West Africa market observes less consistent monthly programs which can oscillate between favoring Suezmax and VLCC tonnage; as such, demand fluctuations have been key drivers of both Middle East and West Africa rates in recent years. The influence exerted by West Africa demand swings is two‐fold with demand swings impacting rates on a near‐term basis, by reducing Middle East availability levels, and a forward basis, by contributing ton‐miles and thus reducing forward availability as performing units take longer to ballast to West Africa and longer to delivery covered cargoes to their destinations, relative to eastbound voyages from the Middle East. In the case of this week’s performance, the former is the case while the latter will follow the earlier West Africa demand surge to support rates later during the quarter”, said CR Weber.

It added that “in the interim, we expect that rates will continue to observe modest downside ahead of a start to the second decade of the November Middle East program, likely by late next week, at which point the supply/demand balance should narrow, leading to stronger rates. We note that with 25 first decade cargoes covered thus far, a further 10‐15 remain likely uncovered. Against this, there are 30 units available. Draws to service West Africa demand should rise from this week’s light level and consume some of the Middle East positions, though the extent is difficult to ascertain with Saudi OSPs favoring Asian buyers with an eastbound OSP discount of $0.45/bbl but Nigeria also more aggressively pricing its crude to attract buyers, having announced this week an OSP discount of at least $1/bbl for all buyers. Balancing the two, we estimate that four to five West Africa draws will materialize leaving a Middle East surplus of between 10 and 16 at the close of November’s first decade. The spread is wide and the actual balance will likely heavily influence rates accordingly. Nevertheless, once charterers move in the incrementally more active second and third decades, the stronger demand against lower position replenishments due to the earlier West Africa surge should prove highly supportive of rates. The Caribbean market was quieter this week which, together with building regional availability and easing sentiment elsewhere in the Atlantic basin, saw rates move into negative territory”, the shipbroker noted.

According to CR Weber, in the Suezmax market “after observing modest downside at the start of the week on higher availability following the weekend and amid souring sentiment due to strong earlier VLCC coverage in the region, rates stabilized from midweek as participants became cognizant of a likely imminent demand boost. Rates on the WAFR‐UKC route concluded with a 7.5 A total of 12 fixtures were reported for the week, representing a gain of one on last week’s tally. Meanwhile, VLCC fixture activity in the region was at its lowest pace in six months. Together with returning Qua Iboe cargoes from earlier force majeure and expectations that November’s Nigerian supply rate will exceed 2.0 Mnb/d for the first time since January, this implies stronger forward Suezmax demand. VLCC coverage of regional cargoes has declined markedly in the November program; to‐date, VLCC charters for cargoes loading during the first two decades stand 62% below the same period during October. As charterers progress further into November Suezmax stems, the greater cargo availability should help to narrow the supply/demand positioning and support fresh rate gains”.

Meanwhile, in the Aframax market, “demand in the Caribbean Aframax market eased 25% w/w to 12 fixtures and while the four‐week moving average remains unchanged at 13 for the third consecutive week, the supply/demand balance loosened on rising availability, allowing charterers to capitalize on the weekly pullback. The CBS‐USG route shed 17.5 points to conclude at ws92.5. Given the likelihood of further availability builds over the weekend, rates could post further losses at the start of the upcoming week. Thereafter, we expect that any cargoes opportunistically delayed until softer rates prevail will materialize and, in contributing to normal demand, should help to stabilize rates” CR Weber concluded.