[davep]

$this->bbcode_second_pass_quote('', 'S')hipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators to store crude and bet that prices will appreciate later in the year.
Su’s Taipei-based company, TMT Co. Ltd., will lease out its 2 million-barrel vessels at below-market prices in return for a share of any profit from the trade on the oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said. [...]

[ReverseEngineer]

$this->bbcode_second_pass_quote('davep', '')$this->bbcode_second_pass_quote('', 'S')hipping investor Nobu Su plans to offer his fleet of 20 supertankers to speculators to store crude and bet that prices will appreciate later in the year.
Su’s Taipei-based company, TMT Co. Ltd., will lease out its 2 million-barrel vessels at below-market prices in return for a share of any profit from the trade on the oil. His fleet, able to hold enough crude to supply Europe for two days, is available for immediate hire, he said. [...]

[jamest]

$this->bbcode_second_pass_quote('highlander', 'N')ow a couple of the big banks getting US taxpayers money to "bail them out" are looking for a bunch of tankers to hold their oil until t he prices go back up. So the speculators are back at it, this time with our money. ARRRRRRRR

[eastbay]

http://www.bloomberg.com/apps/news?pid= ... fer=energy


Maybe someone might want to comment on this article I found on Bloomberg:

Does this mean that the millions of bbls of crude that were floating in storage on tankers these past few months have been unloading their cargoes thereby resulting in an increase in the number of available tankers thus causing a drop in tanker rates?

If so, that could mean the recent run-up in crude inventories may be coming to an end which should cause crude inventories to initially stabilize, then begin to drop in the coming weeks forcing oil prices to rise as summer approaches.

Any thoughts on this?

[TheDude]

Here's another piece from Reuters dated March 26th: Teekay Tankers Ltd. Charter Extension Contributes to Sustainability of Dividends | Reuters

$this->bbcode_second_pass_quote('', 'H')AMILTON, BERMUDA, Mar 26 (MARKET WIRE) --
Teekay Tankers Ltd. (Teekay Tankers) (NYSE: TNK) today announced a
nine-month extension of the time-charter contract for the Aframax tanker
Everest Spirit at a rate of $26,500 per day. This contract extension
brings the number of Teekay Tankers vessels operating under fixed-rate
contracts to seven out of an eleven-ship fleet, or 62 percent of
operating days for 2009.

"The extension of the fixed-rate contract for the Everest Spirit is an
example of the active commercial management of our fleet," said Bjorn
Moller, Teekay Tankers' Chief Executive Officer. "The sustainability of
dividends in today's uncertain economic times is a significant concern
among investors. By chartering out more of our ships for various periods
through the end of 2011, we expect to maintain a strong dividend
regardless of strength or weakness in the spot tanker market. As a result
of our fixed-rate charter contracts, we can pay a dividend even if our
spot tanker fleet does not earn any cash flow. For example, if spot
tanker rates were to decline to an average of $10,000 per day for both
Aframaxes and Suezmaxes, we would still be able to pay a dividend in 2009
in excess of $0.90 per share."

At present, more than 85 percent of Teekay Tankers' first quarter fleet
days were booked at average rates of approximately $23,000 per day and
$39,000 per day for the spot Aframax and Suezmax fleets, respectively.

[TheDude]

Remember negative rate T Bills? From the 20th: FT Alphaville » Blog Archive » Tanked

$this->bbcode_second_pass_quote('', 'A')s shipping news provider Lloyd’s list wrote on Friday:

TANKERS are being chartered for voyages at spot rates that fail to cover bunker and port costs, as earnings dramatically plunge across all tanker types in both dirty and clean trades. Worldscale rates for clean tankers operating on some major routes are now translating to dollar-per-day earnings of less than zero, according to derivatives broker, Imarex. The rates decline has sharply accelerated this month, pushing rates below $10,000 per day for aframax, suezmax and very large crude carriers on all but a handful of world’s key tanker journeys, and well below operating costs for most owners.

The case is particularly worrisome for the world’s VLCC routes (very large crude carrier). As Lloyd’s List explains:

On the world’s largest VLCC trading route, from the Middle East to Japan, rates have fallen to under $8,000 per day, just over 10% of the $70,000 per day seen at the beginning of 2009. “There’s no reason why the market should be where it is,” said Frontline acting chief executive Jens Martin Jensen. “It doesn’t make any sense. If [a crude oil trader] pays $50 a barrel and you have 2m barrels on board [a tanker] worth $100m, who cares if you are paying $10,000 or $20,000 per day? It doesn’t make any difference. It’s weakness in certain owners minds.”

[the48thronin]

$this->bbcode_second_pass_quote('eastbay', 'h')ttp://www.bloomberg.com/apps/news?pid=20602099&sid=aO8N7twunfLc&refer=energy


Maybe someone might want to comment on this article I found on Bloomberg:

Does this mean that the millions of bbls of crude that were floating in storage on tankers these past few months have been unloading their cargoes thereby resulting in an increase in the number of available tankers thus causing a drop in tanker rates?

If so, that could mean the recent run-up in crude inventories may be coming to an end which should cause crude inventories to initially stabilize, then begin to drop in the coming weeks forcing oil prices to rise as summer approaches.

Any thoughts on this?

[TheDude]

Found a site where you can call up rate charts with a free subscription: Capital Link Shipping | Investing In International Shipping

Here's 1 year of the Baltic Clean Tanker:



Are these historic lows?



48th - was there an analogous impact on tanker companies in the 80s with the crude price crash? All I've ever heard about that era and speculative storage was those anecdotes about tankers sitting offshore NYC, though. But data was much more sparse then.

Bookmarking your blog. Good reading appears to be, yes.

[pup55]

$this->bbcode_second_pass_quote('', 'a')necdotes about tankers sitting offshore NYC

[TheDude]

$this->bbcode_second_pass_quote('pup55', 'I')n 2009, we imported 408 million barrels, of which 286 came from someplace that for sure had to be tankered in. So conceptually, the tankerage market for just the US grew about 60% in that time period, and that is before the first drop started going to China....

so conceptually, a third of the fleet has been constructed since 1993.....

[pup55]

pardon me while I "muse" on this.....

At 2 million barrels per trip capacity of a VLCC
and 4 weeks to go from Saudi to China
that's 6 round trips per year.....12 million barrels....

times 146 VLCC's

1,752 million barrels per year shipping capacity
divided by 365.....

the system was, at one time, gearing up to ship an additional 4.6 million barrels of oil per day between Saudi and China (assuming none of the existing tankers were taken offline).....

So, if those little guys used about 3 million barrels last year, the market was anticipating growth up to about 8 mbpd Chinese consumption within the lifetime of those tankers.....so no wonder they were cancelled.... with the 16% contraction in demand that was reported recently....

I wonder if Saudi had that much oil. There was a lot of question even when the market was overheated as to whether they would ever be able to get up to 12...

Anyway, to the peak oilers watching this.... there is obviously a lot of question as to whether or not the system could have ever produced that much oil.....and even more question as to whether or not that much oil could get shipped with the existing tanker fleet.....

This is a really interesting topic. Interesting.

[TheDude]

$this->bbcode_second_pass_quote('pup55', 'T')his is a really interesting topic. Interesting.

[Tanada]

As usual graphs and such at link below the quote. I found this story interesting if a bit over the top in its reporting style. If land bound tank storage continues to fall then sooner rather than later it will be back to 'normal operating levels' and tanker traffic will have to pick up its pace again to provide the supply the refiners need from the producers. It is also true that some of the storage in question was stored on those same idle VLCC so it artificially placed ships out of circulation until those cargoes were sold by the people storing the crude onboard those ships. The natural consequence of those 100 or so ships that were being used for medium term storage selling off the cargo and going back into circulation is axiomatically an increase in the supply of ships available for hire which naturally drives hiring costs down. You can't take any supply/demand equation and ignore a major factor like that, then act astonished at the results you get. Well I guess you can, the author of this article did, but it is a silly way to report fundamental realities of the marketplace.

$this->bbcode_second_pass_quote('', 'O')PEC’s strategy to end a worldwide crude glut is causing havoc for a vital link in the oil industry’s supply chain: the fleet of supertankers that shuttle fuel between continents.

The ships’ average earnings plunged last year by more than half to levels not seen since 2009 and far below what shipping analysts had been predicting. Now, the producer group’s extension of output cuts throughout 2018 is adding to the downturn.

“These cuts reduced the number of cargoes from the Middle East to Asia significantly at a time when a large amount of newly-built vessels are being delivered,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said in a phone interview.

Oil supertankers, known in the industry as very large crude carriers, or VLCCs, can measure a quarter of a mile in length and haul about 2 million barrels of crude. Since the beginning of 2017, the Organization of Petroleum Exporting Countries and its allies have sought to reduce oil production by almost 1.8 million barrels a day, curbing exports and business for tankers on key trade routes. The group in June plans to revisit the cuts, which currently run through the end of the year.

Crude exports from OPEC’s Persian Gulf members last month dropped below 18 million barrels a day for the first time since August, tanker-tracking data compiled by Bloomberg show. In particular, observed shipments declined to China and Japan from Saudi Arabia, Iran and the United Arab Emirates.

Meanwhile, the global supertanker fleet is expected to expand by 4 percent this year, after growing 5.3 percent last year and 7.4 percent in 2016, Clarkson Research Services Ltd. estimates. Shipping rates have tumbled in recent months, a time of year when they often strengthen.

“If OPEC lifts the output cut in its revision in June, the rates would improve as more oil will be pumped to the market,” said Jakob. “But if it doesn’t then the rates would suffer the whole year.”

Earnings for the vessels slumped by 57 percent to $17,794 a day on average last year, the lowest since at least 2009, Clarkson data show. Analysts surveyed by Bloomberg had anticipated an average of $25,000 a day for 2017.

Oil prices and tanker earnings often move in opposite directions. In 2013, a year when Brent crude reached almost $120 a barrel, supertankers earned an average $18,621 a day, according to Clarkson. Two years later, amid the oil-price slump, daily returns jumped to an average $64,846.

Since June, Brent futures have soared more than 50 percent to the highest level in more than three years. They traded at $67.92 a barrel as of 1:53 p.m. in London. Earnings on a key supertanker route from the Persian Gulf to Asia plummeted 69 percent in 2017 to end the year at about $16,000 a day, well below the December seasonal average, Baltic Exchange data show.

The rate rout has affected some of the world’s largest tanker companies. Shares of Bermuda-based DHT Holdings Inc. declined to a 2017-low of $3.55 on Dec. 20, though they have risen slightly in recent days. Frontline Ltd.’s shares dropped 39 percent last year.

Fleet growth and inventory drawdowns, which reduce the amount of fuel for export, are “the dominant reason for the weak tanker market we have experienced during the last 12 months,” Robert Hvide Macleod, chief executive officer of Frontline’s management business, said by email. The OPEC cuts have been offset by an increase in trade flows elsewhere, including the Atlantic Basin and from the U.S. to Asia, he said.

Amid the market turbulence, Antwerp-based Euronav NV on Dec. 21 said it would acquire Gener8 Maritime Inc. of New York, creating an independent tanker operator with a fleet of 75 crude tankers, including 44 VLCCs. Euronav declined to comment because the transaction hasn’t been completed yet. A Gener8 Maritime spokesman didn’t respond to a request for comment.

“The crude tanker market has a double whammy: reduced OPEC exports and too many new ships,” said Burak Cetinok, head of research at Arrow Shipbroking Group in London. “We expect volatility in the rates this year but overall a challenging market.”

In addition, crude is now trading in a structure called backwardation, when near-term contracts are at a premium to later-dated ones, an indication that the market is re-balancing and the attraction of storing oil -- particularly at sea -- is diminishing.

“That frees the ships tied-up for storing oil, adding to the vessel glut,” Petromatrix’s Jakob said.

The second half of this year may provide a turning point for supertankers as demand for OPEC crude increases and fleet growth slows, according to shipping analyst Eirik Haavaldsen at investment bank Pareto Securities AS.

“The first half will be weak though, and probably weaker than the first half of 2017,” he said.

[Subjectivist]

Don’t forget those new Russian ice breaking ankers can sail non stop through a meter of sea ice to load or deliver from Aectc ports.

[GHung]

$this->bbcode_second_pass_quote('Subjectivist', 'D')on’t forget those new Russian ice breaking ankers can sail non stop through a meter of sea ice to load or deliver from Aectc ports.