WTI crude prices are currently trading at their widest discount to Brent in two years, with the spread hitting $7.07/bbl on Sep 25. The Brent-WTI spread has averaged $5.32/bbl in September so far, $1.62/bbl higher than that of August. The gulf between WTI and Brent prices can be attributed to a few short-term factors. Brent prices have been underpinned by lower Forties production due to planned seasonal maintenance over August and September, firm demand from European refiners post-Harvey as well as high OPEC compliance with production cuts. Turkey's threat to cut Kurdish crude exports further fueled bullish sentiment on Monday. In contrast, a swift rebound in weekly US crude production after Hurricane Harvey as well as rising inventories have weighed on WTI prices.

Robust Brent prices have rendered WAF crudes less attractive to Asian buyers, with both Angolan and Nigerian cargoes from the October program still unsold as reported by Reuters. As such, this is expected to result in lower WAF exports to Asia in October. However, the negative impact on ton-mile demand is likely to be outweighed by an expected surge in US exports to Asia during the October loading period. With the arb to Asia open, around 4.86 mmt of crude has been provisionally fixed to move from the USGC/Caribs to the Far East. In comparison, around 4.56 mmt was fixed for September loading while August volumes were 3.03 mmt.

Firm demand for VLCCs loading in the Caribs has been drawing ballasters from Asia/AG, reducing the position list in the AG significantly. The number of prompt and open VLCCs in the AG has fallen by 16% w-o-w, underpinning the ongoing rise in TD3 rates. Rates for TD3 have jumped by w15 points on the week to w55 as of today. With average earnings for the key Caribs-Singapore route nearly three times that of AG-Singapore, owners have incentive to lock in higher earnings for the longer voyage despite the additional ballast days.