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UK Continent-West Africa clean tanker freight rate hits 3-year high amid low tonnage

Freight rates to carry a 60,000 mt clean product cargo from the UK Continent to West Africa on a Long-Range tanker vessel strengthened to a three-year high of w170 Friday as demand for clean cargoes, mostly gasoline, drove rates up amid a very tight positioning list, meaning low tonnage.

Since hitting an all time-low of w55 on October 4, 2016, rates increased steadily, reaching w170 on Friday, close to its all-time high of w175 of July 21, 2015, S&P Global Platts data shows.

Similarly, rates to carry a 37,000 mt clean product cargo on Medium Range tankers hit a 15-month high of w225 on Wednesday, a level not reached since September 1, 2017, on the same UK Continent-West Africa route.

However, rising freight rates meant demand for gasoil is expected to come under pressure over the coming weeks. “A rise in freight rates would surely be passed on to the end user,” the trader said. “It would definitely affect demand for future cargoes.”

Traders said higher ICE low-sulfur gasoil flat prices have already put pressure on demand from end consumers in West Africa. Paired with the arrival of several gasoil cargoes in the first week of December easing tightness in the WAF gasoil market, price differentials for FOB STS 0.3% gasoil cargoes offshore Lome came under pressure.

FOB STS 0.3% gasoil cargoes were assessed at a premium of $14.75/mt Friday, down from a premium of $15.25/mt Wednesday.

Gasoline selling has also been a factor in the buoyant tanker freight market, as participants look to clear their barrels before the year-end.

“People aren’t choosing to store yet, due to year-end, but the bids aren’t there,” a second trader said.

Source: Platts

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