Analysts: "Stellar" Start to Tanker Market in 2015, and 2016 Looking Better than Previously Expected

Arctic's updated rate forecast is an average VLCC rate of $50,000 per day in 2015.

Shipping analysts Arctic say higher oil demand has given the crude tanker market a "stellar" start to 2015, and is on the path to a batter than expected performance in 2016, IHS Maritime reports.

Erik Nikolai Stavseth and Kurt Waldeland, shipping analysts at Arctic, noted in a daily market report that the market is "exceeding expectations by a wide margin."

"The excess crude in the crude market has led to increased demand for tonnage - boosting fleet utilization."

The analysts added that not only is the "steroid shot" from higher oil demand and potentially floating storage increasing rates and contracting activity, the market in 2016 will be stronger than Arctic previously anticipated.

However, they see 2017 as lower again due to influx of VLCC tonnage in 2016 and Suezmaxes in 2017.

Arctic's updated rate forecast is an average VLCC rate of $50,000 per day in 2015, declining to $40,000/day in 2016 and $35,000/day in 2017.

The earnings swing comes in stark contrast to just 24 months ago when Katharina Stanzel, Managing Director of independent tanker owner and operator group INTERTANKO, said its members were "actually paying oil companies to transport their oil."

Stavseth and Waldeland go on to note that although history demonstrates a strong link between the three largest vessel segments, "we see the low fleet growth in Suezmax and Aframax in 2015/2016 resulting in a stronger rate for these classes than what the historical relationship would indicate."

The analysts suggest that because the Middle East is consuming more crude locally, "Latin American and West African barrels have to step up to the plate - and also see the potential for US exports increase to curb the Asian thirst for crude." 

Meanwhile, shares in Euronav, DHT Holding, Tanker Investments, Teekay Tankers, and Tsakos Energy Navigation received buy recommendations from the DNB Markets.

Nikolay Dyvik, Oyvind Berle, and Petter Haugen stated in a daily DNB market report that "We see 11 percent upside on product tanker values and 14 percent upside on crude tankers."

Late last year BIMCO said a rise in crude oil tanker orders for 2016 had brought expected growth in the segment up to an "uncomfortable four-year-high".