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Wednesday, November 14, 2018

Improving prospects for the tanker market

The latest Oil Market report of the Paris-based International Energy Agency (IEA) has revised oil demand for 2007 upwards by 0.3 million barrels per day (mbd) and non-OPEC-production downwards by 0.2 mbd. Both these changes should be positive for tankers with more oil travelling longer distances. 



The tanker market has traditionally closely followed Middle East oil production, which has increased every year since 2002, the year when a decline resulted in a poor tanker market.


The projection for non-OPEC production was high half-a-year ago, but has been revised significantly downwards. This means that the call on OPEC oil for 2007 may increase even though production fell during the first month of this year.



The IEA has also revised China’s oil demand figures since 2005. Overall, these revisions have increased estimates of China’s apparent demand in 2005 by 0.090 mbd, in 2006 by 0.147 mbd and in 2007 by 0.206 mbd. The respective annual growth rates now stand at +4.2%, +6.4% and +6.1%. The IEA stresses that there is still some uncertainty with regard to the figures.


In early January, China’s Ministry of Commerce issued the 2007 oil product import quota for private companies. The quota, which applies to gasoline, jet fuel, diesel, naphtha, fuel oil and low-sulphur waxy residue, will be 15% higher than last year, with roughly three-quarters allocated to state-owned companies. China is expected to represent 28% of the IEA’s 1.55 mbd forecast increase in oil demand in 2007. The U.S. is forecast to represent 21%, the same as the Middle East.


Contact: Erik Ranheim