In the upcoming winter, the finished oil tanker market may receive additional support

According to Shipping World Network, ship broker Gibson stated in his latest weekly report that Europe's demand for refined oil products may increase during the winter.

Gibson said, "The outlook for European oil demand will once again become the focus before this winter, as sustained macroeconomic development has cast a shadow over the region's energy market. In particular, with reduced industrial activity, reduced demand for road fuels, and faster use of electric vehicles, it is expected that European refined oil demand will perform poorly. Given this, people may question whether the potential level of demand is sufficient to sustain a bull market in the refined oil tanker market." .

According to Gibson, The latest manufacturing PMI data for the Eurozone in October was 43.1, a further decrease from September's 43.4, indicating a contraction in economic activity in the region. Weak industrial production combined with deteriorating consumer sentiment is a clear sign that European demand may still face pressure in 2024. The latest data from the IEA shows that gasoline demand in Europe by the OECD decreased by 400000 barrels per day in the third quarter, and overall demand for 2023 is expected to decline by 10% 10000 barrels per day, followed by a further decrease of 90000 barrels per day in 2024. The largest decline was in Germany, where demand decreased by 130000 barrels per day year-on-year, a decrease of 12.9%. Given that Germany is the largest economy in the region with a large industrial and petrochemical sector, the prospects for Europe are becoming increasingly bleak.

Gibson added, At the same time, European finished oil inventories are still at their lowest level since the end of last year. However, due to weak demand levels, it is expected that they will not replicate the large-scale inventories of Russian diesel that were banned from entering Europe last winter. This indicates that although the global finished oil market is expected to tighten in the coming months, Europe may be able to cope with the decrease in inventories this winter. As for imports from the east, from 130 in August Ten thousand barrels per day decreased to 1.18 million barrels per day in October, while the import volume in November showed a downward trend, reaching 1.14 million barrels. This has particularly affected LR2 tankers, which perform poorly compared to the Aframax market.

Nevertheless, there may be reason to remain optimistic in the refined oil tanker market. Firstly, from a trade perspective, the price difference between East and West gasoline should support flows to Europe, ultimately replenishing inventory, especially considering the lack of local refineries in Europe. Secondly, with the expansion of production capacity by Middle Eastern refineries, the supply to the region east of Suez has increased, which will widen the price difference beyond the current level. Thirdly, Middle Eastern refineries Factories are more competitive than European refineries in terms of cost and profit, and the increase in refining capacity east of Suez may bring additional pressure to European refining profits, further suppressing local production and supporting imports. In addition, Singapore's finished oil inventory has been rising in recent weeks, and excess supply may flow to the West.

Gibson concluded, If we see the price difference translate into sustained higher replenishment inventory levels from the East to Europe, LR2 and LR1 tankers should be expected to receive support from these long-distance transportation, but the extent will depend on the health of the European economy. Currently, the European economy still has a long way to go in establishing the required demand intensity and industrial activities to promote these higher future imports. Currently, people will continue to pay attention to the macro environment in Europe The situation and the situation this winter.