The cost of taking crude oil from West Africa to China on VLCCs has hit a near two-month low, due to slack demand from China and a weak Persian Gulf market, sources said.
The VLCC route from West Africa to China, basis 260,000 mt, was assessed at $11.95/mt on Tuesday, the lowest level since March 31, when it was valued at $11.85/mt, according to S&P Global Platts data.
NPI was heard to have taken the VLCC vessel Kondor on subjects at w55.5 for a voyage from West Africa to China with June 14-16 loading dates, which equates to $11.95/mt.
The leading VLCC market in the Persian Gulf is weak and this is depressing the Atlantic market as well, sources said.
Shipbroking sources estimate the tonnage over-hang at approximately 38 VLCC ships in the Persian Gulf, which is close to the highest level in three years.
“We are looking to the Atlantic for some hope, but the Caribs can’t take everything, and there is not much to take Arabian Gulf ships away and reposition them in the Atlantic,” said one shipbroker.
Chinese demand for Angolan crude has been slightly lower for May and June cargoes, with the country’s teapot refineries reducing their purchases from earlier in the year.
“We have had high global refinery maintenance and don’t have peak runs. The teapots haven’t come back into the market and a lot of them have already used up their import quotas,” said one trader.
The lower Chinese demand has placed downward pressure on Angolan differentials and made these barrels more attractive to European refiners. As the voyage time from Angola to Europe is considerably shorter than from Angola to China, VLCC ton mile demand has been reduced by the lower Chinese demand for Angolan crude.
Source: PlattsPrevious Next