Several dozen oil tankers are reportedly sitting idle off Asia as demand for crude products in the region cools.
Thomson Reuters Eikon shipping data collected by Reuters shows that about 50 product tankers are currently sitting idle off the coasts of Singapore and the United Arab Emirates.
According to Reuters, crude shipping activity often slows at the end of January as the Lunar New Year is celebrated.
However, several unplanned refinery outages in Asia as well as the start of seasonal repair and maintenance periods have also dampened trading activity.
Several shipbrokers told Reuters that earnings for long-range tanker have plummeted to between $3,000 and $5,000 per day compared to about $16,500 per day last year.
An expected 16 percent surge in LR2 fleet capacity this year could further exert downward pressure on tanker rates.
Bancosta’s head of research in Singapore Ralph Leszczynski told Reuters that he does not expect “any significant recovery in the market from current levels until the final quarter of this year.”
S&P Global Platts said earlier this week that crude demand in China remained muted until after the Lunar New Year holidays in the first quarter.
S&P Global Platts added that refineries in China are expected to “reduce their runs slightly” from March into the second quarter as previously scheduled maintenance programs kick off.