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Wednesday, December 13, 2017

Weak market balance

Rates have been unfavourable for crude oil tankers so far in 2011, but product tankers have fortunately picked up after a long and deep slump.

 

Many new tankers are coming onto the market and sales for demolition have so far been low.

 

Clarkson Shipyard Monitor has noted the deliveries below:

 

Year

2009

2010

1Q 2011

Total due 2011

Due 2012

Due 2013

Current fleet

Projected removal over the period

Increase 2011 - 2013

Fleet end 2013

VLCC

54

55

16

87

60

36

553

25

153

706

Suezmax

46

40

10

62

60

60

421

14

163

584

Aframax

96

68

13

76

47

47

889

37

128

1017

 

Only one VLCC, one suezmax and six aframaxes were reported sold for demolition in the first quarter 2011.

 

The high oil prices do not exactly stimulate oil demand, but recovery in the world economy seems to continue, even if there is great uncertainty with regard to the effect of high oil prices, debt problems in some European countries and high unemployment as well as a continued housing crisis in the U.S. While second round effects from Japan have not been incorporated due to a lack of clarity, forecasts for other economies remain unchanged from previous reports. Arab league unrest adds to the uncertainty and still artificially high oil price, but high levels of trading in the oil market blur the situation somewhat.

 

World oil demand is forecast to grow by 1.4 million barrels per day (mbd) in 2011, following an increase of 2.0 mbd in the previous year. The disaster in Japan led to a sudden decline in the country's use of oil. However, this should be offset by fuel substitution from nuclear to oil based energy and rebuilding operations later in the year. With the start of the second quarter, world oil demand has eased in line with the seasonal norm. Risks to the forecast remain, particularly from higher oil prices, which are likely to have a slightly negative impact on transport fuel demand worldwide.

 

According to preliminary data, total OPEC crude oil production in March averaged 29.31 mbd, a decline of 0.627 mbd from the previous month. However, OPEC generally estimates the average demand for crude in 2011 to reach 29.5 mbd, about 0.4 mbd higher than the year before.

 

Nevertheless, the demand increase will probably not be sufficient to balance the fleet increase over the next couple of years, which could be more than 8% annually for VLCCs and suezmaxes and somewhat lower for aframaxes, which until now have had a weaker market balance than the larger tankers.

 

Deliveries of product tankers in the next couple of years are also expected to be lower than during the peak years 2008-09 while product tanker demand is hard to anticipate due to the large arbitrage trade.

 

Contact: Erik Ranheim