Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Shale oil and a seismic shift in product tanker markets

Shale oil and a seismic shift in product tanker markets
Earnings on what used to be the front haul Atlantic products trade dropped into negative territory last week underlining the seismic shift in shipping engendered by the US shale oil revolution, and a redistribution of global refinery resources.

According to Clarkson Research, 37,000 tonnes UKCont/USAC clean was paying minus $1,300 a day at around WS70 while eastbound rates have been heading north this year to within striking distance of WS140. US exports of diesel to Europe last month were expected to rise close to 2m tonnes, the highest ever recorded volumes notes London broker EA Gibson.

Revival of the US refinery industry on the back of cheap shale oil combined with refinery closures in Europe have reversed the position of a few years ago. US oil production is forecast by the Energy Information Administration to grow by 900,000 bpd this year to 7.3m bpd.

European inventory levels of diesel are at their lowest level for six years and of gasoil the lowest for this time of year since 2007. As winter closes in Gibson points out that Europe is becoming increasingly dependent on imported fuel.

New refinery capacity in Asia and the Middle East - the 400,000 bpd Jubail refinery started up last month - provides further competition. Further European refinery closures are forecast maybe five or six over the next few years - a situation not helped by carbon taxes.

All of which means a marginalisation of the once mighty westbound MR trade although the growth of US exports does give transatlantic triangulation possibilities - Clarksons estimates round voyage earnings for such a voyage are a weakish $13,000 a day at the moment but the average this year has been closer to $20,000 a day. On the other hand long haul exports from the Middle East and India are something to look forward to said Gibson.

TAGS: Europe Tankers