TD7 vessel supply overhang deepens as Forties premium hurts NWE refinery demand
TD7 vessel supply in the 14-day ahead window is materially long at 61 ships against a 90-day moving average of 45. The supply signal is firmly bearish, and the cargo demand signal reinforces the bearish outlook: the Forties crude Relative Basket Index is at +$1.76/bbl, indicating Forties is expensive relative to global crude competition and actively discouraging regional refinery intake. The Forties RBI was even more overvalued last week.
June Goh noted today that Forties is now trading at FOB Dated+$22/bbl, crushing European complex refining margins and removing the economic incentive for NWE refiners to run at elevated throughput rates. With regional refinery demand for North Sea crude dented, Aframax fixing window gone quiet. The freight RBI at -$10.55/MT confirms TD7 rates are modestly undervalued relative to global benchmarks; a mildly supportive signal that has failed to generate any fresh enquiry given the scale of the fundamental headwinds.
All four visible fixtures over the past seven days were concluded on April 9, with no business transacted in the six days since. That day’s fixing showed a wide spread of 40 WS points: Alfa Alandia fixed fully at WS 400 loading Norway for UKC, Ionic Althea and Haifeng each fixed at WS 390 on the same routing, and STI Gratitude fixed at WS 360 loading Sullom Voe for Spain. The current spot at WS 361 has since converged with the bottom of that range, and the steady daily build in the tonnage count since April 9 confirms the market has slowed.
The paper market prices in a steep correction from current levels. April TD7 spot is at WS 361, before dropping to WS 250 in May, and WS 179 in June. The curve structure prices in a continued tonnage build, though the pace of normalization will depend on whether Forties economics improve and European refinery margins recover enough to restore crude import demand.
With 16 ships above the trailing average count, six days of muted market activity, and Forties at a level that is actively shutting out NWE crude demand, the near-term TD7 outlook is firmly bearish. Charterers can push below last done with confidence.
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