Crude oil tanker operators have two more strong quarters to look forward to before the tide turns on the supply side in 2016, according to BIMCO.
Global oil demand for Q2 is the weak point for 2015 as a whole. However, demand is forecast by OECD/IEA to reach the highest level ever at 94.07 million barrels a day (mb/d) in Q3, with Q4 aiming even higher for 94.78 mb/d, BIMCO says.
Those numbers have been significantly adjusted upwards in recent months.. All of this could contribute to a final round of fireworks, before the crude oil market becomes a ”seller’s market.”
As it goes for crude oil tanker supply growth for the rest of 2015, the pace is set to increase slightly as only 1/3 of BIMCOs’ forecasted 14.5 million DWT has been delivered. The opposite is likely to happen for the product tankers, which has seen 46% of the expected full year deliveries already being afloat.
Contracting now affects the future. Out of 12.4 million DWT ordered so far in 2015, 38% are due for delivery in 2016, 51% for 2017 and the rest scheduled for 2018. In the crude oil tanker segments most interest is seen for Aframax (28 units) followed by Suezmax (19 units) with only 17 VLCC orders completed so far.
The freight market strength is not seen to abate significantly during the summer in the northern hemisphere, BIMCO says. It is responding positively both to a lower oil price and more volatility than we have seen over the past years.
In the coming months June-August, BIMCO expects earnings for crude oil tankers to remain strong and at around the current level. As pointed out for some time now, the supply side is what primarily buoys the freight rates this year, with support coming from the lower oil prices, too.
In the product tanker segments, BIMCO finds the current strength to be a positive surprise. Freight rates are unusually high for this time of the year.
Moving forward the positive demand factors does not seem to dissipate as we move into Q3, but a temporary weakness could hit product tanker demand making freight rates soften somewhat.
As the supply side keeps getting stronger throughout the year, BIMCO sees more downside than upside risks.