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Tuesday, November 13, 2018

Tanker market prospects for 2005 based on different factors

According to Petroleum Intelligence Weekly, global oil supply grew by 3.6 mbd (million barrels daily) in 2004, with about one-third of the increment coming from non-OPEC producers and the rest reflecting higher OPEC crude and other oil production. 2004 demand growth is expected to come in at around 2.1 mbd. 

Problems in Venezuela, Nigeria and elsewhere seriously depleted global stocks at the beginning of 2004. With demand staying unexpectedly strong through the second quarter, supply and demand were almost balanced at 81.3 m-81.4 mbd.  

All that changed in the second half of the year, with oil supply running a more typical 0.6 mbd ahead of demand in the third quarter before turning in a strikingly contra-seasonal 1.2 mbd build in the fourth quarter (4Q04), ending the year with a 0.4 mbd cushion in December, according to preliminary assessments by Oil Market Intelligence. 

According to the International Energy Agency (IEA) there was on average 1 mbd stock building during the first three quarters of 2004, with stock depletions 1Q04 and stock build of 1 and 0.6 mbd in 2Q04 and 3Q04. 

Refinery capacity is likely to remain tight, which in general might mean more trading activity. This would benefit product tanker operators.  

When evaluating tanker market prospects for 2005 we observe that the following factors are or may be different in 2005 than in 2004:


  • Reduced increase in oil demand (IEA: + 2.6 mbd 2004-2003, +1.4 mbd 2005-2004)
  • Reduced stock-building (IEA: +0.3 mbd in 2003, + 1.0 mbd until 3Q04, zero 2005)
  • Relatively less long haul transportation (IEA + 3.2 mbd 2004-2003, +0.2 mbd 2005-2004 - when assuming oil demand increase split into non-OPEC +1.2 mbd, and balance +0.2 mbd taken from Middle East)
  • But potential for more long hauls from West Africa to Asia due to the need for sweet crudes for start-ups of new refineries.
  • Increased supply of tankers, plus 7%, 8%, 9%, and 12% for panamaxes, aframaxes, suezmaxes and VLCCs based on delivery and phase-out figures (Erik Ranheim can provide you with more detailed information)
  • Few old tankers pre-MARPOL left to be phased out; average for tankers sold for decommissioning in 2004 was 27 years, but maximum age after April this year will be 25 years.
    If you have any queries please contact Erik Ranheim /Jan Svenne