Clean freight EoS market report: Spot steady, forward curves overvalued

AG LR1: Spot TC5 is fairly valued around 160 WS. Sep briefly dipped to 150 WS but has rebounded to 156 WS, with arb margins still intact – showing freight retains pricing power. Jet and gasoline arbs remain open, while naphtha margins are improving for both LR1 and LR2 econs. LR1 tonnage is neutral at 9 ships and demand looks slightly bullish into Sep. However, Q4 TC5 is ~20 WS points overvalued versus current fwd arb margins.

Takeaway: Spot & Sep TC5 steady and fairly priced, but Q4 looks overvalued.

AG & WCI MR: Model vs. spot gap continues to close for TC17. WCI diesel arbs are now shut for Sep, while AG margins have improved slightly. Although AG arbs are marginal into Europe and Africa they look workable basis historical price action. Gasoline into Durban remains materially open. Tonnage is neutral at 13 vessels and trending below average since June, helping support rates and prove physical arb volumes still move at the margins. Spot TC17 should stay supported as Sep rolls up, while TC12 looks overvalued and likely to soften.

Takeaway: TC17 supported by improved arb margins and neutral tonnage supply, but TC12 rates could soften.

Michael Ryan, our Freight Commodity Owner at Sparta, brings over a decade of experience with Trafigura in the energy sector managing risk across products and regions before becoming Head of Risk for subsidiary Puma Energy. Michael then joined the Trafigura commercial team trading freight while successfully growing the physical fleet through strategic dealmaking.

Sparta is a live, market intelligence and forecasting platform that enables oil traders, refiners, banks, hedge funds and wholesalers to have access to real-time and global actionable insights to capture market opportunities before others.

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