Pent-up demand resulting from the coronavirus pandemic and increased ton-miles due to some clean tanker operators' reluctance to carry Russian oil products boosted freight rates for Torm in the second quarter, the company said Aug. 18.
However, demand concerns are hovering over the market and the strength in Q2 could dissipate over Q3 as cost-of-living concerns cloud the macroeconomic environment.
Time charter equivalent rates for the clean tanker company leaped 103% on the year to $29,622, Torm said in its Q2 interim financial results.
Platts, part of S&P Commodity Insights, assessed freight rates for the Clean Arab Gulf-UK Continent trip basis 75,000 mt at an average of $45/mt in Q2, up 101% on the year.
The clean tanker market was supported in Q2 by the "trade recalibration" caused by sanctions and self-sanctioning of Russian product exports as a consequence of Moscow's invasion of Ukraine, Torm said.
Platts assessed it at $55/mt on Aug. 18.
The International Energy Agency on Aug. 11 hiked its 2022 oil demand growth estimate by 380,000 b/d to 2.1 million b/d, citing "soaring" oil use in power generation and gas-to-oil switching in industry prompted by the Ukraine crisis and surging gas prices.
Global refinery runs are set to increase further in August after rising in July and reach their highest level since January 2020, the IEA said. They are on track to rise 2.6 million b/d on the year to 80.7 million b/d in 2022 and 1.3 million b/d to 82.1 million b/d in 2023, the IEA said.
On a quarter-on-quarter basis, oil demand growth is forecast at 3.8 million b/d in Q3 after a 400,000 b/d drop in Q2 due in part to the impact of COVID lockdowns in China and before it moderates to 1.2 million b/d in Q4, according to Platts Analytics.
Pent-up demand for summer travel and an easing of Chinese lockdowns is supporting demand in Q3 but global oil demand continues to face multiple challenges. "Oil prices remain elevated despite their recent decline [and] COVID-induced lockdowns remain apparent in certain countries," Platts Analytics said.
Following the strong Q2, clean tanker markets have so far witnessed an underwhelming Q3. Market sources attribute a recent drop-off in outgoing cargoes to a slowdown in demand due to concerns of a global recession leading to demand destruction for key products.