International Oil Daily: Market Eye: Fuel Oil Arb Opens as Shippers Query Outlook for Clean Products

“In a Mar. 15 report, London based shipbroker and consultant Poten & Partners questions whether its worth paying extra for that coating on new 75,000-120,000-ton Aframax tankers, given the recent dramatic growth in medium-haul diesel trade from the US to Europe which is exclusively on smaller 45,000-ton Handymax product tankers. “Long-range 90,000-ton LR1 and 120,000-ton LR2 tankers, as Aframaxes are known when carrying clean products, are already used to transport naphtha from the Mideast Gulf to Asia and jet fuel in the opposite direction to Europe, as well as carrying clean diesel from India to Europe. “Demand for LRs was expected to boom as European refineries closed and new Mideast and Asian mega-refineries came on stream, but traders say volumes are likely to be squeezed by intense competition from the US, which is already causing project delays and cancellations. “While conceding that the coating gives shipowners greater flexibility, Poten & Partners concludes that it probably isn’t worth the extra investment.