US EXPORTS TO PARTLY COMPENSATE FOR OPEC CUT

摘要

OPEC’s production cut, which will stretch until 2018, does not augur well for the VLCC market as it will hurt tonnage demand in the Arabian Gulf. However, the increasing output in the US Gulf is partly counterbalancing the impact of the production cut, providing some solace to owners. As output may increase further in the coming months, it will either lead to lower imports or higher exports by the US. Going by the recent trend, the latter is likely. The country’s production has increased by about 500kbp from the lows of September 2016, but there is no major impact on its imports so far. On the other hand, its exports have increased by about 400,000 bpd this year from last year’s average. Moreover, as the average haul length of US-Asia is almost double that of the Middle East-Asia, any growth in exports from the US to Asia will support tonne-mile demand. With rising US production, vessels are being ballasted to the West, which was earlier considered only for the backhaul trade. Recently, the first VLCC was loaded from the US Gulf oil terminal and such activities can improve VLCC employability. However, as the expected rise in US crude output will only partly counterbalance OPEC’s production cut, the overall outlook remains bearish.