The cost of taking 270,000 mt crude oil cargoes from Hound Point, UK, to the Far East on VLCCs rose $300,000 Wednesday to reach a nine-month high of $5.4 million lumpsum, the highest since January 20, according to S&P Global Platts data.
Glencore was heard to have paid $5.4 million for a Southwold-Far East voyage on November 15 on the Texas VLCC. A trader at Glencore declined to comment.
This was one of a steady flow of VLCC fixtures to take North Sea crude oil to the Far East in recent weeks which has trimmed the North Sea position list, and in some case left charterers in the region reliant on ballasters to do fresh liftings.
“There has been a big gap in fixing because there were no ships available for natural [loading] dates,” a shipbroker said. “Charterers could only take ballasters from the East as and when they arrived, and they wanted high rates for those…the North Sea position list is still tight and there are only a couple of ships left until mid-December now.”
While rising VLCC freight rates and seemingly tepid Asian demand would appear bearish for the arbitrage, a steady stream of ships have been fixed to take Forties and Ekofisk crude to the Far East in November.
In addition to the Texas fixture, trading and shipping sources have said the Houston, Ellinis and New Vista VLCCs are all set to transport Forties to the Far East in November.
Although North Sea arbitrage fixtures have continued unabated, some traders have questioned the current extent of Far Eastern demand, particularly given the large volume of crude which China and South Korea have purchased from a variety of regions in recent weeks.
“The oil will sail East but I still don’t see many end-users for November Forties so this could all be a house of cards unless the Eastern demand really is there to take up the slack,” a North Sea crude trader said.
Source: Hellenic Shipping News.