Higher Bunker Prices Contributed to Softer Tanker Rates in Q1: Teekay Tankers

by Ship & Bunker News Team
Monday May 23, 2016

Teekay Tankers Ltd. (Teekay Tankers) [NYSE:TNK] says higher bunker prices contributed to softer tanker rates during 2016's Q1.

"The crude tanker market remains well-supported by strong oil supply and demand fundamentals. However, a number of seasonal and one-off factors led to a quarter-on-quarter decline in tanker rates during the first quarter of 2016," Teekay Tankers stated in its Q1 report. 

"These factors included a period of heavy refinery maintenance to make up for maintenance that had been deferred in 2015 due to strong refining margins, mild winter weather in the Northern hemisphere, and rising bunker costs as a result of higher oil prices."

Teekay Tankers says it achieved an adjusted net income attributable to shareholders of $46.0 million during the period, compared to $39.0 million during the same period last year.

"Overall, the Company expects that 2016 will be a relatively strong year for crude tanker rates driven by the positive fundamentals of high oil supply, strong oil demand, relatively low oil prices, new trade routes, and moderate fleet growth," said the company.

While Teekay says that it expects 2016 to see accelerated global fleet growth, rising 4.4 percent in the Suezmax segment and 4.1 percent in the Aframax / Long Range 2 (LR2) segment, a lack of access to capital means that there have been virtually no new tanker orders so far this year, with only 1.1 million DWT of orders placed in the first quarter of 2016 - the lowest quarter for new tanker orders since 2009's Q4.

"If this continues, we expect very low global fleet growth after the current order-book delivers over the course of 2016 and 2017," concluded Teekay Tankers.

Last month, Ship & Bunker reported that Teekay Corporation (Teekay) said that the failure of the Organization of Petroleum Exporting Counties (OPEC) and non-OPEC producers to agree on an oil production freeze would be inconsequential for the tanker markets in the near term.