TD25 Aframax: WTI undervalued, but less acutely than during March, and a rising tonnage count tempers the near-term rate outlook

USGC Aframax vessel supply in the 14-day ahead window stands at 8 ships against a 90-day moving average of 9, placing prompt availability 1 vessel below average. The supply signal is broadly neutral, but the context behind that count matters: the list has built materially from just one open Aframax on 31 March, reflecting the wave of ballasters that have repositioned into the Atlantic as WTI economics attracted vessels westward. That rapid count recovery is the primary headwind facing the near-term TD25 rate outlook.

The WTI crude grade RBI sits at -$7.77/bbl, confirming that US crude remains competitively priced versus alternatives into European destinations. Neil Crosby noted this morning that WTI has been moving toward expensive rather than cheap in NWE terms recently, with the WTI/Brent spread narrowing materially compared to its extremes of ten days ago: the crude RBI, while still clearly bullish for cargo demand, is less acute a signal than it was at peak dislocation. With the freight RBI currently meaningfully overvalued relative to global Aframax competition, a signal that is difficult to ignore and represents the most significant bearish input in the picture today.

Fixture activity over the past week has slowed notably. Ebn Hawkel was fully fixed loading USG for Med at WS 725 for a 20 April laycan, a strong headline rate that reflects the pricing environment of last week rather than today’s mood. The absence of fresh fixtures since then, combined with the building tonnage count, suggests the market is pausing to test whether charterers will blink at current levels or whether owners can sustain last done levels. The Baltic/UKC market is flat-lining on last done, with surrounding Aframax markets; Cross-Med and Med/UKC are both softening, adding modest directional pressure from adjacent regional routes.

The FFA forward curve illustrates the concerns. Spot is at ~ WS 700 and April, but May paper has collapsed to WS 365 and June to WS 255, with the curve flattening sharply through Q3 and Q4. This extreme backwardation reflects that the market acknowledges today’s spot rate is elevated and likely unsustainable at current cargo flow levels, but has priced in a significant normalization by summer. The ceasefire developments today have contributed to this unwind, with Brent pulling back sharply on the headlines although Iran’s 10-point proposal contains terms that are largely unacceptable to all parties, and the more likely interpretation is time-buying rather than genuine resolution.

With the tonnage list lengthening, freight overvalued, surrounding markets softening, and the forward curve already pricing a sharp correction, the near-term TD25 outlook is bearish. The fundamental WTI cargo demand signal remains intact but is less bullish than it was. Owners who fixed last week at WS 700+ levels were well-positioned. Charterers covering prompt requirements should push for below last done levels.