Freight

Market Overview

USGC diesel arb flows supported by weaker TC18

Freight - Market Overview

In line with the weakness seen globally for MR CPP freight, rates from USGC to Brazil (TC18) have also weakened. Vessel supply out of Houston remains stable and so reinforces our view that PADD 3 refiners will continue to push diesel exports along the route, prioritising over weaker econs to Europe.

Arbitrage economics over the next few weeks firmly put USGC as the supplier of choice for delivery into Brazil/ECSAM.

And though the arb is technically closed, Houston is still among the more economical long haul diesel suppliers for NWE.

TD25 has eased and helped narrow the WTI/Brent paper spread

Freight - Market Overview

Plentiful Afra tonnage in the USG has helped push TA freight rates lower. This has been a key element of WTI/Brent narrowing over the last few weeks, alongside the risk off seen in Brent.

US arb econs to Europe actually remain solid. WTI/Brent paper is going to have to take care of that soon; chances are that volumes heading TA are going to need to drop from a fundamental perspective, meaning the bottom might not have arrived yet.