Is the Crude Tanker Industry Still Going Strong?
Crude Tanker Industry Outlook: The Positives and Negatives
Stock performance
On November 19, 2015, crude tanker stocks fell by 7.5% on average compared to their prices on October 31, 2015. For the same period, DHT Holdings (DHT) was the worst performer, with its stock price down by 10.8%. Nordic American Tankers (NAT) proved the best performer, as its stock price fell by just 0.85%. Other crude tanker stocks for the same period performed as follows:
Teekay Tankers (TNK) fell by 7.7%
Tsakos Energy Navigation (TNP) fell by 7.6%
Frontline (FRO) fell by 8.8%
Euronav (EURN) fell by 9%
Investors who are interested in broad exposure to industrial stocks can invest in the SPDR Dow Jones Industrial Average ETF (DIA).
Industry drivers and series overview
Low oil prices have encouraged countries, especially China, to import larger quantities of crude oil for stockpiling for future use. In this series, we’ll assess how lower oil prices have benefited the tanker companies in both income and cost.
The crude oil market is integrated, and development of the world economy affects the tanker industry. Over the last year, crude oil production in the United States has increased substantially, and seaborne imports have decreased.
This was outweighed by increased imports from China, which increased the ton-mile demand and benefited crude tankers. In this series, we’ll look at China’s crude oil imports, which are key to tanker demand.
Crude tanker demand depends on crude oil demand. In this series, we’ll assess the health of the two largest economies, the United States and China, to gauge the demand for oil. We’ll also assess the medium-term and long-term outlooks for the crude tanker industry through newbuilds and second-hand vessel prices.
Tanker market rates are also affected by newbuilds that enter the market, increasing the supply of vessels. We’ll assess the orderbook to see if there is a possibility of oversupply of vessels in the industry.
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