Market update: 22 December, 2017

Increased activity in the tanker market

Although certainly a little later than we had envisaged and hoped for, activity in the tanker market began to increase in mid-December and rates have gradually risen in most segments.

These developments are largely a consequence of charterers at oil companies wanting to ensure availability of freight capacity for the period immediately following the Christmas holidays. Not much more is needed to accelerate the market, despite further cuts from OPEC.

Within the crude oil segment, the VLCC rates have moved from the low level of $12,000/day to about $20,000/day. A very interesting merger between Euronav and Gener8 was announced yesterday, which together will become the world’s largest independent crude oil company in the VLCC and Suezmax segments. The merger is basically sound and positive for the overall consolidation of the tanker market.

The product tanker market continues its stronger trend since the beginning of December. In the Atlantic, combination voyages have risen to $15-18,000/day, which is very positive. We have previously talked about an expected seasonal improvement - and now it is here! In both the Middle East and the Far East, the rates are about $12-15,000/day, which is a clear improvement from just a month ago. In some parts of the world, the ice has also begun to come into play (e.g. the St. Lawrence River and parts of the Baltic region). Here, ice class vessels, such as our P-MAX tankers, can benefit from rates at levels clearly above the rest of the market.

We are monitoring with keen interest the continuing decline of oil stocks in the world. In the US alone this week, we saw major reductions for the fifth consecutive week, and total stocks in the country are set to show the largest Q4 decline since 2000. The driving forces include OPEC’S cut backs, greater than expected US exports of crude oil and, purely and simply, high demand for oil worldwide. This is a good foundation for the 2018 tanker year.

And having said that, we can affirm that the usually very interesting first quarter has already started!

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Merry Christmas and a Happy New Tanker Year