The track record so far for the large crude oil tankers seems to be holding its ground and while the year-to-date performance has been stellar, it seems as though things may get even better, according to Allied Maritime Research’s weekly market update.
Namely, demand for energy continues to surge and it seems that the low prices have boosted demand beyond most expectations.
“This boost has been met by a sudden increase in imports by the U.S., an economy that has always played a major role for tankers, but one that has also failed to provide them with much needed support recently due to its own tight oil “revolution”,” said George Lazaridis, Head of Market Research & Asset Valuations.
Despite having a negative 1Q2014, the U.S. economy closed the year with a very strong GDP growth rate. The reported unemployment rate has dropped to its lowest level since late 2008.
The Greek shipbroking firm predicts that the average year-to-date TCE of US$ 41,509/day for VLCCs could easily climb to much higher levels from those seen over the past 5 years, with similar optimism also held for Suezmaxes and Aframaxes as well.
The optimism is further backed by a fairly low newbuilding ordering trend despite the number of switches being made from dry bulk to tanker orders and the placement of new contracts that have taken place during the past 6 months.
” Yet even with this, many still pause when it comes to the long term approach of the crude oil tanker market. There is still plenty that could upset things in the long-run, while these high rates could easily be eroded as shipbuilding capacity at the moment is more the adequate to be an equalizer to the slow pace growth expected for crude oil trade within the next three to five years, and this is only under the condition that oil producers such as Saudi Arabia continue to swamp the market with cheap oil, because if that where to reverse things could turn ugly and quite quickly,” added Lazaridis.