Tanker Boom "Even Stronger" than Predicted

Tanker market earnings in the oil and crude segment have surprised international shipping analysts by "significantly" exceeding forecasts.

Despite that start of 2015 already having been hailed as "stellar" for the tanker market, earnings growth in the oil and crude segment during the first half of 2015 has surprised international shipping analysts by “significantly” exceeding forecasts, ShippingWatch reports.

However, while companies like Scorpio Tankers Inc. (Scorpio Tankers) and Euronav have posted “exceedingly solid” interim results, the tanker boom has reportedly not lead to widespread significant share price growth among companies.

Eirik Haavaldsen, from Pareto Securities, predicts that the tanker market will continue with its robust growth until and including the first quarter 2016.

Euronav, which was the top pick by New York analysts out of listed companies earlier this year, is said to be expecting continued strength in their results into the third quarter.

New York analysts are reportedly maintaining an average target price of $17 per share for Euronav, with some going as high as $24 per share, driven in part by strong Middle East oil exports, lower bunker prices, and lower crude volumes shipped to Asia.

Amit Mehrota, with Deutsche Bank AG (Deutsche Bank), commenting on Euronav’s results, said that earnings in the product tanker segment have soared despite it being the weakest part of the year for the market.

Mehorta also raised his target price from $15 to $18, and said "we believe Euronav's earnings power can move from cyclical to sustainable (at least for the next few years).”

Meanwhile, Scorpio Tankers' senior management, coming off a successful first half of 2015, have announced that they will not be taking delivery of any newbuildings after the end of this year.

However, analysts are said to believe that with current yard prices, market conditions, and Scorpio Tankers' liquidity and cash flow, the company will likely exercise and option for 12 additional vessels.

On Thursday, it was reported that Scorpio Tankers, crediting a flourishing tanker market, had reached a net income of $96.8 million during the first six months of 2015.