Tanker owners haven’t enjoyed a healthy ride of freight rate increases in the past few months, as the oil market has been experiencing turbulences. However, there are still “pockets” of resilience, which offer room for more optimism moving forward. In its latest report, shipbroker Allied Shipbroking said that “with crude oil prices for both Brent and WTI reaching recent highs it is clear that the recent disruptions caused to the market by the devastation brought about by Hurricane Harvey where not only short lived but there was enough resilience in the market to even drive for a rally in prices as oil product reserves started to retreat on the back of the temporary halt in operations. According to the International Energy Agency’s most recent report, Global oil demand is moving at a significantly faster rate than expectations while the excessive crude oil inventories of the past seem to be retreating now at an ever-higher rate” said the shipbroker.

According to Allied’s, George Lazaridis, Head of Market Research & Asset Valuations, “with both the U.S. and Europe showing ever improving economic figures and likely to continue seeing an upward drive in oil consumption, the market has started to show better signs of life then what we were seeing a year ago. At the same time, the Far East is still showing to have a fair increase in appetite for this vital energy commodity giving the commodity a fair boost in recent months. Yet despite this re-balancing of the market and the strong improvement in global oil consumption (expectations are for the final year growth figure to reach 1.6 million barrels a day or 1.7%) rates in the tanker market continue to lack any positive vibe, while most feel that they will remain under pressure for the near-term at least”.

Lazaridis said that “during the course of the year, the crude oil tanker fleet (VLCCs, Suezmaxes and Aframaxes) has increased by around 3.68%. That is just shy of 2% more then what the current expectation for growth in consumption for the whole of the year, while given that we still have another four months of newbuilding deliveries and subdued scrapping activity, the current anticipation is for this difference to grow further before the year comes to a close. The current orderbook still holds at relatively strong levels compared to the current active fleet, with the orderbook ratio for the aforementioned sizes still holding at above 14% and unwilling to drop significantly as new orders continue to be noted in this sector. The pain of this inbalance has been felt over the past 12 months, with rates having shown only a mere shadow of their previous performance”.

Allied’s analyst says that “these figures however do not paint a complete picture of what’s being going on over the past couple of years. The global trade has seen a major shift. The Far East has undertaken the role as main importer of seaborne crude, now playing a major driver in the freight market as the West started to retreat. At the same time and over the course of the past decade, the oil products market has also taken an ever-bigger chunk out of the total trade, as most of the main producers of crude look to take up for themselves the higher value added from oil products. This has been the main driving boom behind the oil product markets as well as the main argument behind the large level of newbuilding contracting that was undertaken in the MR and LR sizes between 2012 and 2014. Furthermore, it is testament to this the fact that the market for these oil product size segments has performed relatively well, when compared to the rate of growth in the fleet that they have been subjected to during the past 5 years. The question is how well the oil markets will be able to keep things positive in the oil seaborne trade and counter the continued growth in tonnage supply in the mediumterm. At the same time could there be a more bullish possibility in stall for the nearterm and more specifically in the final quarter of the year, as the combination of the winter seasonal spike and the restocking of oil reserves by most of the West could help shift the balance to the ship owners favor once more”, he concluded.