In this week's Market Movers: US Gulf Coast sour crude flows may soon see rebalancing; pre-Thanksgiving short-covering boosts Aframax freight rates; a supply shortage of US steel leaves buyers scrambling; and US biofuels markets expect further delays before 2021 blending mandates are released.

But first and foremost, the worsening coronavirus pandemic and any progress on the economic stimulus front captivates market attention.

Starting off …

Market watchers this week will continue to pay close attention to the rise in coronavirus cases, and any progress on the economic stimulus front. While crude has been given a lift by recent advances on the vaccine front, upside resistance remains at around $42 a barrel for NYMEX crude and $45 a barrel for ICE Brent. Positive vaccine test results will continue to provide support for crude, but the delayed timing of a widespread vaccine release remains baked into the market.

Turning to the tanker markets …

Since the US Thanksgiving holiday has charterers working hard to cover outstanding cargoes, freight market watchers expect mid-size tanker freight to trend higher this week. This will lend a further boost to historically low rates.

As the graph shows, Aframax freight has spiked as regional position lists have thinned on the back of the fixing spree. On November 20 Platts assessed freight for the benchmark 70,000 mt US Gulf Coast-UK Continent route at Worldscale 62.5, or $12.74/mt, up 39% from November 6.

Rates for long-haul voyages on Suezmax and VLCC tankers are poised to remain rangebound. The current pandemic destocking cycle leaves global tonnage long for these larger tankers, while fixing for end-December and early-January laycans has already occurred.

Meanwhile, in the US Gulf Coast crude market …

Sour crude flows may soon see rebalancing after Genesis Energy announced on November 18 a plan to reopen the Cameron Highway Oil Pipeline System. The pipeline was closed in late August, and sour Southern Green Canyon barrels were diverted from Texas delivery points to Southern Louisiana. The region typically sees ex-pipe deliveries of Mars crude and other Gulf of Mexico-produced medium sour grades.

Updates on the pipeline system have contributed to a gradual decline in front-month differentials. The line graph on the screen shows that the front-month Mars to cash WTI differential reached a low of minus 5 cents/b on October 20, but has since rebounded with December Mars trades.

Looking at biofuel blending mandates ….

US biofuels markets expect further delays before the Environmental Protection Agency releases 2021 biofuel blending mandates, keeping traders uncertain about fundamentals for renewable identification numbers. EPA administrator Andrew Wheeler said in mid-November that the agency would miss a November 30 deadline to release mandates and did not give a firm timeline for an announcement.

Finally, in the US steel coil markets ….

A supply shortage of US steel has left buyers scrambling and caused prices to skyrocket. The daily S&P Global Platts US hot-rolled coil price is up nearly 70% in just over three months, with lead times at flat-rolled mills reaching historic levels. There is no relief on the immediate horizon, as buyers face limited options into the first quarter of 2021.

For more on all the issues affecting commodity markets, check out Platts Live, a section of our website created for our customers to continue engaging with us, and each other. You can find it at the address displayed on your screen.

Thank you for kicking off your Monday with us and have a great week ahead.