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Friday, September 21, 2018

Tanker market likely to be strong for the remainder of 2005

Delays in transit of the BosporusStrait  are keeping aframax and suezmax rates up, while a lack of available VLCCs is sustaining rates for the biggest tankers. At the same time the recovery of U.S. refineries after the hurricanes is happening faster than the recovery of U.S. oil production, which is still running at a reduced rate, with some new production also delayed. This may mean increased U.S. oil imports. The tanker market for the remainder of 2005 might therefore continue to be relatively strong.  

U.S. Department of Energy/Energy Information Administration (EIA) data for the last whole week of November shows that U.S. crude oil production averaged less than 4.8 million barrels daily (mbd), and it is likely to remain well below 5 mbd for many weeks, if not months, to come. This is compared to some 5.4 mbd before the hurricanes struck the U.S.  

With refinery throughput already over 15.1 mbd, and possibly heading towards 15.5 mbd or higher over the next several weeks (the December 2004 average was 15.75 mbd), simple subtraction indicates that crude oil imports will need to average well above 10 mbd to prevent a drawdown from crude oil inventories. There is ample crude oil inventory available, but should crude oil imports continue to average just 9.7 mbd, as they did in week 47, a substantial drawdown on inventories should be expected. If this is the case, U.S. crude oil inventories are likely to begin a sustained drop; if not, then the U.S. refineries will need to buy more imported crude oil.

U.S. commercial stocks 25 November were 8% above the level at the same time last year and also 8% above the average over the last three years. U.S. strategic stocks (SPR) 25 November were 5% above the level last year and 6% above the average over the last three years. 

Contact: Erik Ranheim