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Transatlantic Clean Tanker Rates Rally To 5-Month High

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January 13, 2014

reuters logoLONDON, Jan 13 (Reuters) – Clean tanker rates on major export routes were mostly lower on Monday while firmer bookings helping to lift the transatlantic market to its highest level in five months.

Rates for medium-range (MR) tankers for 37,000 tonne cargoes on the TC2 route from Rotterdam to New York were at W148.96 in the Worldscale measure, or $14,047 a day when translated into average earnings and at its highest since early August last year.

That compared with W149.17 or $13,967 a day on Friday and W124.38 or $8,312 last Monday.

“Refinery maintenance in the U.S. alongside the current frigid temperatures that briefly affected runs at some refineries has pushed U.S. product prices higher and opened up gasoline arbitrage opportunities,” broker SSY said.

In recent months, average earnings have slid to their lowest levels since they were first compiled in 2008, exchange data showed.

Average earnings per day are calculated after a vessel covers its voyage costs such as bunker fuel and port fees.

In contrast, rates for MR tankers on the U.S. Gulf (USG) to Europe route were weaker at W106.79 or $5,848 a day. That compared with W109.29 or $6,304 on Friday and W114.46 or $7,270 a day last Monday.

“Rising demand rates in European CPP (products) markets incentivised owners to trade cargoes towards Europe further negatively impacting rates on the USG-UKC (Europe) route,” broker CR Weber said.

“Rates may experience pressure as there appears to be only a limited number of cargoes looking for capacity in the next few weeks,” Deutsche Bank analyst Justin Yagerman said separately.

In November last year, rates on that route rose to their highest level since earnings were published in June 2012, Baltic Exchange data showed. Buoyant demand for diesel products has boosted tanker activity on the U.S. Gulf to Europe route, known as the backhaul journey as vessels usually travel to the U.S. East Coast first and then pick up return cargoes.

Long Range 1 tankers, carrying 55,000 tonne loads from the Middle East Gulf (MEG) to Japan, reached W89.09 or $1,328 a day. That compared with W89.32 or $1,443 a day on Friday and W93.95 or $2,673 a day last Monday.

Larger Long Range 2 or LR2, 75,000 tonne shipments on the Middle East Gulf to Japan route were at W70.00 or $339 a day. That compared with W70.25 or $490 a day on Friday and W76.35 or $2,825 last Monday.

“The milder Northern Asia winter, few westbound cargoes and more naphtha moving from Europe to Asia that is in turn building LR supply east of Suez has resulted in a significantly softer market for LRs in the Mideast Gulf,” SSY said. (Reporting by Jonathan Saul)

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