This week’s analysis highlights the contrasting trends in dirty tonne days versus VLCC tonne days. The VLCC segment has experienced a noticeable decline since the end of the first quarter of this year, in contrast to the growth observed in dirty tonne days.
This week’s special focus dives into the dynamics between dirty tonne days and VLCC tonne days. The data reveals a distinct downward trend in VLCC tonne days, particularly noticeable from the end of the first quarter of this year. This trend suggests a weakening in the VLCC segment, reflecting broader market challenges.
In contrast, the dirty tonne days experienced signs of recovery in early September. However, this increase was short-lived, as recent estimates indicate a renewed downward trend. The decline in VLCC tonne days is contributing to a generally bearish sentiment in the market.
On a more positive note, August concluded with a significant upward trend in seaborne crude oil shipments to China, a trend expected to continue as winter demand approaches. This uptick in shipments may provide some support to the market. Last week, we analyzed the correlation between vessel supply and market rates in the VLCC AG sector. Our findings highlighted the ongoing challenge of meeting demand, as cargo activity for VLCC AG remains well below the desired benchmark. Despite some positive indicators, the overall outlook for the VLCC market remains cautious as we approach the last quarter of the year. The persistent imbalance between supply and demand suggests that market conditions may remain challenging.
In the oil market, prices have resumed an upward trajectory following a significant interest rate cut by the U.S. Federal Reserve. Last week, Brent crude dipped below $69—a year-low—but has since rebounded to above $74. At 1303 GMT, Brent crude futures were up 90 cents, or 1.2%, reaching $74.55 per barrel. Similarly, WTI crude futures for October rose by 88 cents, or 1.2%, to $71.79 per barrel. The U.S. central bank's decision to cut interest rates by half a percentage point on Wednesday has been a key driver behind this recovery. Typically, lower interest rates stimulate economic activity and boost energy demand. However, this move also signals potential concerns about a weakening U.S. labor market, which could slow economic growth. In contrast, persistent weak demand from China continues to exert downward pressure on oil prices. Data from the Chinese statistics bureau revealed that refinery output in China slowed for the fifth consecutive month in August. Additionally, China's industrial output growth fell to a five-month low last month, with further declines in retail sales and new home prices.
For more information on this week's freight supply and demand trends, see the analysis sections below. You can also log in to our Newsroom page under Insights & News to stay updated with the latest reports.
SECTION 1/ FREIGHTMarket Rates (WS) ‘Dirty’ WS - Firmer
VLCC - Suezmax - Aframax
Sentiment in the dirty freight market remained strong in the third week of September, with current levels fueling optimism for a stronger fourth quarter.
‘Product’ WSLR2 Firmer
LR1 Steady
‘Clean’
MR Mixed
SECTION 2/ SUPPLY ‘Dirty’ (# vessels) - Mixed
The supply of crude tankers declined during the third week of September on the Suez West Africa and Aframax Mediterranean routes, while a slight upward trend was observed in VLCC activity on the Ras Tanura route.
'Clean' LR2 (#vessels) - Decreasing
MR (#vessels) - Mixed
SECTION 3/ DEMAND (Tonne Days)‘Dirty’ Mixed
‘Clean’ Decreasing
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