Dirty freight market report: AG VLCC tonnage is long and the TD3c RBI remains overvalued

The Sparta RBI (relative basket index) compares the route in question against all material relevant global competing routes delivering crude grades into the same destination.

It provides an under/overvalued signal and is an inverse leading indicator for freight demand and FFA price action.

• TD25 RBI has moved back close to neutral. USGC Aframax tonnage in the 10-day ahead window is tight at four vessels below the trailing 90-day average. The market outlook compared to last week has not changed materially other than that the bottom in rates looks to have now formed. June should move into the 150s WS while spot should approach 160 WS.

• TD20 RBI is mildly undervalued. Prompt WAF Suezmax tonnage in the 10-day ahead window is tight with just a couple of open vessels. TD20 should be supported in the 85 WS range. A potential issue could be the continued weakness in VLCC rates, which will start to make Suezmaxes less attractive for certain routes.

• TD3c outlook remains weak even after the selloff last week and into the beginning of this week. The RBI is still overvalued even as the rate weakness continues. As mentioned last week this is a bearish signal. AG VLCC tonnage is very long at 16 vessels more than the 90-day trailing avg in the 14-day ahead window. Price action is weak, the RBI is overvalued even in the face of weak price action and tonnage is too long. The outlook is bearish. Owners seem to be positioning for the East rather than for the West due to the OPEC increases.

(TD25 RBI analysis)

(TD20 RBI analysis)

(TD3c RBI analysis)

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.

To find out how Sparta can allow you to make smarter trading decisions, faster, contact us for a demonstration at sales@spartacommodites.com