FIS: Tanker Market Overview: CPP Tanker positivity remains
Tanker freight rates improved on recovering oil demand and benefited from the high crude oil prices above $100/bbls that supported better margins.
However, the profitability was most clearly seen in the mid-sized crude carriers like MR and LR1/2 that went up to record levels in May.
The supply tightness of oil inventories like middle distillates also supported the freight rates with lots of re-routing away from the Black Sea, due to the Russia-Ukraine conflict.
The spot earnings of Suezmaxes and Aframaxes averaged about $37,000 and $63,000 per day, respectively, for the non-scrubber fleet between March and mid-May, according to data from Clarksons Research.
As such, the earnings of Aframaxes had tripled from the 10-year average over the Mar-Apr period, while VLCC earnings remained weak to almost breakeven levels or lower, based on non-eco vessels.
However, the earnings of scrubber-fitted eco VLCCs are likely to fare better in the high bunker price environment, which may improve further in the current situation of an increase in tonnage miles.
Technical view of the tanker market (TD3C):
July Futures – Technically bullish with downside moves considered as a countertrend last week, the futures have traded above the USD 9.6930 resistance, meaning we target the USD 10.258 high.
Downside moves that hold at or above USD 9.1924 will support a bull argument. Below this level the technical will have a neutral bias.
Technically bullish, we are conscious of the small 5 wave pattern that has formed from the USD 8.8850 low on the 24/05. This is warning we have the potential to enter a corrective phase soon. If we trade below USD 9.5730 then we have the potential to test the support zone (USD 9.4437 – USD 9.1924).
Technically bullish with key support at USD 9.1924, caution on a move below USD 9.5730.
Written by Titus Zheng Shujian and Edward Hutton, Edited by Chris Hudson (https://freightinvestorservices.com/fis-live/).
