TD25 – USGC Aframax Market Report

Vessel supply for TD25 has tightened dramatically, falling from 17 ships on 17 March to just 4 vessels as of last Friday, well below the 90-day average of 11 ships. This sharp contraction in tonnage reflects strong WTI crude demand from Europe, with the Crude Grade RBI at negative $12.76 per barrel signaling that USGC barrels remain highly competitive against global alternatives. This negative crude RBI remains the dominant bullish signal in the current market structure, overriding the mildly elevated freight rate RBI, which suggests freight is only marginally overvalued relative to fundamentals.

Neil Crosby noted today that with WTI trading at a substantial discount to Brent, US crude exports remain exceptionally attractive for European refiners, underpinning consistent transatlantic demand. The widening spread has improved the landed economics for European buyers, with US crude deliveries pricing competitively against alternative sourcing options. The TD25 spot rate currently stands at 461 WS, while the freight rate RBI indicates rates have moved ahead of the immediate supply-demand balance, though the overvaluation is modest and unlikely to trigger material rate softness given the strong crude fundamentals.

Over the past seven days, fixture activity has confirmed robust demand and rising rate momentum. The Amarthea fixed for a USG to UKC voyage at 485 WS with a 20 April laycan, while the Pacific Diamond secured 425 WS for a similar route with a 07 April loading date. The Front Sirius achieved 450 WS for an 08 April laycan, the Alicante fixed at 435 WS, and the Seabravery concluded at 420 WS for early April dates, all demonstrating persistent strong demand into UKC.

The April FFA contract traded in a range of 460 to 520 WS and firmed through the session, reflecting the physical market strength. The May contract saw initial softening before recovering to trade up to 370 WS. The Q3 and Q4 contracts both firmed from 205 to 210 WS and 220 to 225 WS respectively. The market is starting to price a longer conflict.

All primary signals are bullish for near to medium-term freight rates and demand. The vessel supply picture is tight, the crude grade RBI strongly supports transatlantic cargo demand, fixture levels confirm owners are achieving higher rates, and April FFA trading reflects continued near-term strength despite a mildly overvalued freight RBI. Owners should push for above last done levels buoyed and strong crude fundamentals, while charterers are advised to cover April requirements promptly before the supply squeeze intensifies further.