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Monday, November 19, 2018

Commercial analysis




Adieu – a short market review after 30 years with INTERTANKO

Everything must come to an end. I have been with INTERTANKO for more than 30 years – too long… far too long. During this time I have been following several tanker market cycles. It has been like continuously feeling the pulse of world politics and economy. It is the dramatic turning points we are looking for but hardly ever can see, we just know they are coming. I have used many sources to try...... Login to view this article


The fleet is increasing…

Sales for scrapping have been meagre so far in 2016, one VLCC, one aframax, six MRs, and two smaller tankers. The newest tanker sold was the VLCC Faridah built in 1995, which was actually an FSO. Deliveries are, on the other hand, increasing. McQuilling expects the following to be delivered this year: 61 VLCCs, 41 suezmaxes, 41 aframaxes, 29 LR2s, 6 panamaxes, 28 LR1s, and 68 MRs.   The light...... Login to view this article


Employment old/new VLCCs

By using we have looked at the 115 VLCCs we have recorded as being built up to 2000. The below graph shows that many of these are not trading, 16% were anchored in ballast, 24% anchored laden probably many used for storage, 15% were in a stopped position, 9% were moored, and just under 36% were reported to be under way at an average speed of 11.4 knots.   To compar...... Login to view this article


NITC fleet yet to fully operate in active trading

One of the wild cards this year has been the National Iranian Tanker Company (NITC) 13.6 m dwt tanker fleet, which has largely been inactive and used for storage. The fleet, which we know includes 37 VLCCs, nine suezmaxes, five aframaxes and three smaller tankers appears to have an additional five vessels we cannot find any trading record for. When we look at the current activity of this fleet...... Login to view this article


US crude oil stocks at an all-time high

US Crude oil stocks are at an all-time high, as is illustrated in the graph below: US crude oil imports up until 15 April were the highest since 2012 for this period. OECD total stocks stood at 100 days’ forward use the last quarter of 2015 compared to 93 days for the same period in 2014 and 91 days for the same quarter in 2013. China growing its reserves China increased its strategic reserves ...... Login to view this article


DNB predicts good LPG summer market

DNB says in its latest market report that the summer season could lead to a spike in rates, as the firm believes current fleet utilisation is high. Inventory draws should push 2016 US LPG exports to another all-time high, while US propane dehydrogenation (PDH) facilities are likely to disincentive propane consumption in US steam-crackers, boosting the amount of LPG available for export, which...... Login to view this article


IEA monthly report: Non-OPEC production declining

The Paris-based International Energy Agency (IEA) has released its latest monthly report. Here we present the pertinent points contained within. Growth in global oil demand will ease to around 1.2 mbd in 2016, below 2015’s 1.8 mbd expansion , as notable decelerations take hold across China, the US and much of Europe. Preliminary 1Q16 data reveal this is already occurring, with year-on-year grow...... Login to view this article


Spotlight on suezmaxes

It has been VLCCs that have benefitted the most from the surge in the tanker market this year, while suezmaxes have so far this year fallen marginally behind the aframaxes according to the benchmark routes we are following. The main suezmax trade is West Africa to Europe. According to Fearnleys, suezmax tonne-miles ended at a soft 0.7% growth last year. Volumes traded grew by a strong 6.7%...... Login to view this article


Global trade retracting

Total global trade, by way of an opposite to trade in oil, retracted in 2015 for the first time since the doldrums in the 1970s, except for 2009 when the full effect for the financial crises hit all trades. Some have begun to talk about peak trade. At the same time as the movement of commodities and hardware has retracted, data-flows increased by 53% from 2007 to 2014, according to McKinsey....... Login to view this article


Product trades and refinery capacities

Of the most important indicators for the futures oil product trades are developments in the refineries.  The Paris-based International Energy Agency’s (IEA) Medium Term Report offers details of refinery capacity expansions, and additions, until 2021. The largest refinery expansion according to planned projects is the Middle East, which expanded by 0.417 mbd in 2015, and is expected to expand by...... Login to view this article


Oil market expected to balance end 2017

According to the US-based Energy Information Administration’s (EIA) short-term outlook as issued this week, US crude oil production averaged an estimated 9.4 mbd in 2015, and it is forecast to average 8.7 md in 2016 and 8.2 mbd in 2017. The EIA estimates that crude oil production in February averaged 9.1 mbd, which was 0.08 mbd below January’s level. US oil production is one of the most essenti...... Login to view this article


What did you learn in school today?

INTERTANKO’s Senior Manager, Research and Projects, following a week of seminars and meetings on the subject, offers his take on the state of the oil and tanker market. ------------------ “I have been to three short seminars this week at DNB, Bloomberg and the Paris-based International Energy Agency (IEA) and I had hoped that I would see the situation in the oil and tanker market more clearly....... Login to view this article


Oil trades will continue to increase, but not by much

The Paris-based International Energy Agency’s (IEA) Medium Term Report says that global trade is yet to peak but will climb steadily to hit 27 mbd in 2017 as consuming economies take advantage of low oil price to build inventories. US imports are set to rebound as domestic production slows. Thereafter, traded volumes will decline as refiners are forecast to draw inventories and US production...... Login to view this article


Looking back… and to the future

Looking back at the most important trends in the tanker market we see that the fleet development has grown much more strongly than demand. The below graph shows the trends in oil consumption, trade in tonne miles, average distances sailed and the fleet as indices starting at 100 in 1973. Converting the trends to indices allows us to see the relative development between the different trends. Mos...... Login to view this article


Surging liquefied natural gas trade

A report written and published in accordance with the Atlantic Council Policy on Intellectual Independence predicts that a surge in new supplies of liquefied natural gas (LNG) will hit the global market over the next several years. LNG export projects already under construction worldwide will add up to 175 billion cubic metres of LNG capacity by 2020, mainly from Australia and the United States...... Login to view this article


Wild cards in the tanker market

Demand for tankers was exceptionally high in 2015 for three reasons: OECD stocks were, according to the Paris-based International Energy Agency (IEA), built by two million barrels – or a VLCC load per day – and in addition Chinese strategic reserves were increased. China seized the chance to add up to 147 million barrels to its reserves in the first eleven months of 2015, according to Reuters’...... Login to view this article


Tension abounds in the oil and tanker market

We have witnessed a weakening of the tanker market and freight rates have been on the way down over the last days – while the Brent Blend oil price, after having breached the $30 per barrel level on the way down, has strengthened again.  One reason for the recent price increase was said to be rumours about possible oil co-operation to reduce production, but these rumours have to some extent bee...... Login to view this article


LNG recovery to take time despite strong demand growth

DNB Markets says that, despite 2016 being set to be the first year since 2011 with significant demand growth for LNG shipping, they estimate only a USD4k/day uptick in rates in 2016 due to close to historically weak fleet utilisation. Looking for upside potential, DNB highlights vessels rolling off old contracts becoming obsolete. DNB has only marginal changes to our 2016–2018 LNG trade...... Login to view this article


What can 2015 figures teach us on the 2016 tanker market?

The tanker market in 2015 will stand out as one of the best in history for big ships. The main reason for this is that global oil supplies expanded by 2.6 mbd in 2015, following gains of 2.4 mbd in 2014. Supply, though, cannot continue to increase stronger than demand as there will be a limit to stock building, even if the low oil price in the short term may stimulate the use of tankers as...... Login to view this article


Drama in the oil and tanker market

Oil is the most important strategic commodity in the world and the sharp plunge in oil prices have both economic and political effects, and will have an even greater impact should the low oil price continue for some time. But is it sustainable in any market that the price for a product is double the break-even rate for the marginal producer over a prolonged period? The tanker market has indeed...... Login to view this article

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Bill Box
Senior Manager, Commercial
P: +44 20 7977 7023