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VLCC freight rates settled down to around USD 45,000 per day in the second half of May but continue at sustainable levels that have been the norm in that market
Persistent weakness in Europe and the impact of Hurricane Sandy led to the International Energy Agency (IEA) cutting its global oil demand forecast for Q4-2012 down to 90.1 million barrels per day.
Projected oil demand continues to slide, with growth entirely driven by non-OECD countries. OECD-demand is expected to contract by 0.4 million barrels per day (mb/d) this year and 0.1 mb/d in 2012. The 2012 forecast by IEA leaves little room for optimism, as the current estimate is as low as 1.7% (1.5 mb/d)
Overall, it’s noticeable that record numbers of fixtures and demand for tonnage only produce a short-lived spike at rather low altitudes – making little impact on stretched owners’ financial accounts. Ship owners without a solid cash balance and a strong, or at least sustainable, cash flow will find it increasing difficult to continue in this business at the present level and volatility.
Global oil demand has never been higher, despite recent revisions. Demand is driven by growth in Asia, the Middle East, Latin America and FSU, while requirements in North America and EU are contracting in 2011 as well as in 2012. The IEA has revised down its demand outlook by 0.2 million barrels per day (mb/d) for 2011 to reach 89.3 and by 0.4 mb/d for 2012 to reach 90.7. Growth outlook now stands at a modest 1.1% in 2011 and 1.6% in 2012.
Right now, all eyes seem to be on the Suez Canal as Egypt faces political unrest. Events have pushed the oil price above USD 100 per barrel for Brent crude
Our recommendation remains to balance your exposure to market by seeking a fixture in the time charter market.
One of the most characteristic developments in 2015 was the declining price of crude oil during the second half of the year. Brent crude oil dropped from USD 57 a barrel (bbl.) on 1 July to hit USD 37 a bbl. on the last trading day in 2015.
Freight rates are difficult to predict. This time around, the sudden tightness took us by surprise in a positive way.
Global oil demand is seasonal, with Q1 being the weakest season – again, leaving only upside for the remainder of the year.
