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Saturday, October 20, 2018

MARKET INFORMATION

2000 a year of fundamental change

According to the World Oil Tanker Trends Report by Colin Cridland of SSY Consultancy and Research, 2000 was a year of fundamental change.

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The Erika accident made almost immediately oil companies to introduce policies of age preference in their chartering by favouring newer double hulled over older single hulled units and making stronger efforts to ensure that any older vessels chartered had the necessary “approvals”. During 1999 not only was there no premium to be seen for newer vessels but these on average earned 2% less freight (in Worldscale terms) than older vessels! Post “Erika” things did begin to improve steadily. By the end of the 1q2000 newer vessels were earning a 5% premium over older vessels, this increased to a 10% premium by end 2q 2000, 11% by end 3q2000 and 16% by end 4q2000. The “Erika” sinking has therefore initiated substantial changes in industry practice particularly concerning chartering of ships of similar size.

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The SSY World Oil Tanker Trends report investigates the consequences of the Erika accident and changes in voyage patterns.  Please click here for a copy of the whole report

VLCC/ULCC ORDERBOOK NOW 23% OF FLEET

At the beginning of March 2001 the orderbook for VLCCs number 97 tankers or 29.7 million dwt (source: J. Grieg & Co. Shipbrokers). In particular the orders for Aframaxes and product tankers have increased over the last 6 months. Please click here for the whole orderbook and the development since 1994

SECONDHAND PRICES DECLINING

After a period of increasing newbuilding and secondhand prices since May 1999, prices for some sizes of ships appear to have levelled out or even weakened slightly.  Further details can be downloaded from the market section page by clicking here

US EIA CUTS 2001 OIL DEMAND GROWTH FORECAST BY 0.1 MBD, AND SEES LOWER OIL STOCKS EFFECTIVELY OFFSETTING DEMAND DIP

The US Energy Information Administration said Tuesday 7 March 2001 that it now expects 2001 world oil demand to grow by only 1.5 mbd, down from the 1.6 mbd forecast in February 2001, although low oil stocks could offset most or all downward pressure on prices. EIA noted that its projections do not assume any further OPEC output cuts this year. World oil demand is expected to continue to grow despite concerns over a gradual economic slowdown in industrialised countries.

This amended forecast results in projected world demand levels of 77.2 million bpd in 2001 and 78.9 million bpd in 2002. Cumulatively, EIA has lowered the expected world demand total for 2001 by 0.7 mbd from the level projected three months ago. Despite the lower demand outlook, industrialised country oil stocks continue to fall below expectations, effectively offsetting most if not all of any resulting downward pressure on prices, EIA noted.

Non-OECD Asia is still expected to be the leading region for growth in oil demand over the next two years. In the OECD countries, EIA expects that oil stocks will continue to be tight compared to normal levels and will provide enough support to prevent prices from falling significantly.

Non-OPEC production is expected to increase by another 0.7 mbd in 2001 and 0.9 mbd in 2002, an increase of 0.1 mbd from EIA's February projections. Much of the gain is seen coming from the former Soviet Union. EIA concluded that OPEC's 1 February quotas are sufficient to support OPEC's desired price range, and that no further cuts in 2001 are required.

Total oil demand in the US is expected to increase by 0.26 mbd in 2001, and by 0.43 mbd in 2002, which represents a 1.8% increase, between 2001 and 2002 despite the current economic slowdown. However, if economies in consuming countries experience a more severe slowdown than expected in the short-term, US oil demand growth could be reduced by as much as 0.15 to 0.2 mbd.

Average US oil production is expected to be flat in 2001 and 2002 at about 5.8 mbd. Alaska is expected to account for about 18% of the total US oil production in 2002. Alaskan production is seen rising by 5.6% in 2001, as a result of the Colville River (Alpine) and Prudhoe Bay (Aurora) satellite fields, and by 2.4% in 2002.

Please click here to view the entire report

VLCC FREIGHT RATES REMAIN FLAT, SUEZMAX RATES STRONGER

For further market information, please click here