World News
Drewry: Tanker Shipping's Fortunes Rest on US Shale Oil Production
Drewry Shipping Consultants Ltd (Drewry), says that future tanker shipping earnings will largely hinge on the amount of U.S. shale oil production taken out of service.
Writing in the latest edition of its Tanker Forecaster report, Drewry says low oil prices have made crude extraction unprofitable for many U.S. producers, leading to a fall in U.S. rig counts, diminishing exploration, and reduced investment in production, and leaving tanker operators hoping for a rise in U.S. crude oil imports.
"Continued expansion of refinery capacity in Asia is likely to maintain growth in the global oil trade over the next five years," said Rajesh Verma, lead analyst at Drewry's .
"But demand from Asia alone will not be sufficient to sustain the improvement in tonnage utilisation.
"The only alternative source of growth is a recovery in U.S. oil imports, especially when declining European refinery capacity will mean lower import volumes to EU countries."
Drewry expects that the increased stocking over the past nine months that has resulted in accelerated global oil trade is a trend to continue through to the end of 2016.
Additionally, Drewry says it expects the influence of increased stockpiling activity to weaken, leaving further development in trade to a recovery in U.S. imports and stronger demand from Asian markets.
Drewry also says tanker fleet growth is expected to continue at 1.3 percent year-on-year, gathering momentum into 2016, with vessel deliveries expected to rise over 60 percent over 2015 levels.
"Buoyant fleet growth will also be supported by a slowdown in scrapping activity," said Drewry, adding that tanker vessel earnings are expected to remain strong on ample oil supply and low bunker prices.
"Large vessels dominate the order book and this is a reflection of the expected increase in long voyage trades,and next year's opening of the widened Panama Canal will further support demand for the bigger classes of ships," said Verma.
In May, BIMCO reported that a strong tanker market is extending peak season high earnings with averages not seen since 2008.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 510.00 | 2.50 | 611.00 | 4.00 |
| Rotterdam | 477.00 | 1.00 | 618.50 | 4.00 |
| Houston | 469.50 | 0.50 | 610.00 | 2.00 |
| Fujairah | 501.50 | 1.50 | 708.50 | 3.50 |
| Global 20 Ports Average | 532.00 | 2.00 | 711.50 | 0.00 |
| Global 4 Ports Average | 489.50 | 0.50 | 637.00 | 0.50 |
| Global Average Bunker Price | 571.00 | 1.00 | 759.00 | 0.50 |
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