Charter rates for very large crude carriers (VLCCs), which plunged to new 12-week lows this week, could find temporary respite as owners’ resistance leads to further rate cuts even as rates remain under pressure, brokers said.

“In nautical terms, the supertanker market is a confused swell, or a slack tide,” said Ashok Sharma, managing director of BRS Baxi Far East in Singapore.

Average December VLCC rates from the Middle East to Asia are at a four-year low.

The North Sea Forties pipeline outage, output cuts by oil producers, a lack of arbitrage cargoes from the West, more crude shipments to Asia from the United States and a lack of ship scrapping paints a confused picture over the future direction of the supertanker market, he said.

“Rates have bottomed out for the time being. There’s resistance to further plunging of rates and there seems to be some kind of resurgence,” Sharma added.

Repairs to the 169-km long Forties pipeline, which carries around a quarter of all North Sea crude output, could take several weeks after being shut on Dec. 11 following the discovery of a small crack in part of the system. “The shut-in of Forties production and subsequent deferment of cargoes in the North Sea is expected to weigh on VLCC demand in the Atlantic Basin, affecting the long-haul trade to the East,” Rachel Yew, commodity and freight analyst at oceanfreightexchange, said in a note on Thursday.

Up to five Hound Point-to-Asia fixtures, typically to China and South Korea, are seen every month with three fixed for December-loading so far, Yew said.

The closure of the Forties pipeline meant “400,000 barrels a day have been taken out of the North Sea long-haul trades – the impact will last for the next few months unless there are more long-haul shipments from the United States,” Sharma added.

But the ongoing widening of the spread between Brent-U.S. crude prices – around $6.50 a barrel on Friday – and Dubai-WTI spreads are expected to significantly improve the economics of moving U.S. crudes to Asia.

“More significantly, the corresponding jump in the Brent-Dubai EFS spread to an 1.5-year high is expected to have wider implications for the crude tanker market as West African crudes are increasingly unattractive to Asian buyers,” Yew added.

VLCC rates on the Middle East-to-Japan route dropped to about 49.50 on the Worldscale measure on Thursday from W51.50 a week ago. They fell to W47.50 on Tuesday, the lowest since Sept. 22 Rates on the West Africa-to-China route fell to around W56.75 on Thursday from W58.75 last Thursday. They dropped to W53 on Monday, the lowest since Sept. 22.

Charter rates for an 80,000-deadweight-tonne Aframax tanker from Southeast Asia to East Coast Australia nudged higher to W111 on Thursday from W109.25 on the same day last week.

Source: Hellenic Shipping News.