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Industry Opinions

 

The Goldilocks Tanker Market
April 24, 2015
The market is not too hot, not too cold, but just right

The tanker market is off to a good start so far this year. Rates for crude and product tankers are up compared to the same period last year and 2013. While experiencing healthy rates and prices, the tanker market is not so volatile that it elicits irrational behavior. The level of newbuilding contracting so far this year is an indication of this new normal.
 
Uncle Sam's Crystal Ball
April 17, 2015
The impact of US energy trends on the tanker market

On April 14, the U.S. Energy Information Administration (EIA) released its Annual Energy Outlook 2015 with projections through 2040. The headline conclusion of the report stated that the United States may become a net energy exporter sometime during the forecast horizon. EIA administrator Adam Sieminski said: “With continued growth in oil and natural gas production, growth in the use of renewables, and the application of demand-side efficiencies, the projections show the potential to eliminate net US energy imports in the 2020 to 2030 timeframe.” What are the implications for the tanker industry of the various EIA scenarios?
 
The Other Middle East Exports
April 10, 2015
Product exports start to deliver on their promise

Middle Eastern oil powerhouse Saudi Arabia has been eyeing the product export markets for several years now. Exporting refined petroleum products in addition to crude oil is advantageous to OPEC members as refined products have a higher value and are not subject to the OPEC quota regime. However, while refining capacity in the Middle East, and Saudi Arabia in particular, has expanded significantly, domestic demand in these countries has also shown rapid growth. For some time this has limited the availability of product for export, but that could be changing as new capacity continues to come on stream. Additionally, increasing exports have boosted employment opportunities for product tankers in recent years.
 
Big Deal or No Deal?
April 03, 2015

How Iran sanctions relief might impact the tanker market


Yesterday, the P5+1 and Iran announced that they had reached a framework agreement on the containment of Iran’s nuclear program in exchange for the gradual lifting of sanctions, the details of which will need to be completed by June 30th. The question is: What does this mean for the tanker market? Under the agreement, Iran will receive gradual sanctions relief once it has complied with the conditions under the agreement.

 
Coming Clean Down Under
March 27, 2015

Australian refinery closures increase product tanker demand


In recent years, a number of oil companies operating in the Australian market have decided to close their least efficient refineries and import products to satisfy demand. Today, Chevron announced to divest its 50% shareholding in Caltex Australia which owns the 109 thousand barrels per day (Kb/d) Lytton refinery. In 2012, Shell shut down the 85 Kb/d Clyde refinery, the 124 Kb/d Kurnell refinery closed in October 2014, while BP’s 102 Kb/d Bulwer refinery in Brisbane is scheduled to close later in 2015. The 120 Kb/d Geelong refinery, formerly owned by Shell, was sold in 2014 to Vitol and remains operational. After these closures, Australia still has four operating refineries with a total capacity of 465 Kb/d.

 
Spring Break for MRs?
March 20, 2015
Is the strength in the MR market sustainable?

Several years ago, the general thought seemed to be that product tankers were the future, while crude tankers were expected to have a hard time for the foreseeable future. The idea was that refinery expansions in India and the Middle East were going to lead to growing product tanker demand while the growing oil production in the US was going to curtail crude tanker demand. As MR rates have improved significantly in the last six months, the question arises if this is due to fundamental changes that are finally falling into place or whether it is the result of a seasonal upturn that could fizzle out over the next months.
 
Crude Awakening for Aframaxes
March 13, 2015

 Dirty Aframax tankers continue to have potential


For many years, the Aframax crude oil tanker was the workhorse of the crude oil tanker industry. This vessel size was very versatile, could enter almost any crude oil load and discharge port worldwide and was an ideal match for the rapidly growing short-haul crude trades in regional basins such as the North Sea, the Baltic Sea, the Caribbean Basin and the Mediterranean and Black Sea, as well as the regional trades in South East Asia. From 1990 to 2010, the Aframax fleet more than doubled from 407 to 837 vessels, a compound annual growth rate of 3.7%, making it the fastest growing crude tanker segment over that time period. In recent years, however, the popularity of the Aframax tanker seems to have diminished somewhat, while the growth of the Suezmax and VLCC fleet has continued. Has the age of the Aframax come to an end or does this segment have further upside?

 
Close the Window - It is Cold Outside!
March 06, 2015
Product tankers facilitate global arbitrage trades

Over the last couple of years, the U.S. has developed into one of the largest exporters of oil products. Increasing domestic crude production and access to cheap shale gas has improved the international competitiveness of U.S. refineries. At the same time, the U.S remains a significant importer of oil products. In 2014, the U.S. exported 3.12 Mb/d of refined petroleum products and they imported 1.74 Mb/d (see Fig. 1). As a result, arbitrage opportunities regularly open up in the US for refiners and traders. Recently, several unrelated issues have created arbitrage opportunities on both the East and West Coast of the United States.
 
Can Owners Avoid Growing Pains
February 27, 2015

Fleet expansion remains limited despite healthy market


Fleet growth was limited in 2014 as the large orderbook that existed at the start of the financial crisis was mostly delivered or cancelled prior to last year. Contracting was also limited as the financial turmoil and market uncertainty kept owners away from the shipyards. Growing demand with limited fleet growth resulted in a tightening supply/demand balance and improving freight rates.

 
South of the Border Swap
February 20, 2015
The Potential Impact of a US - Mexican Oil Exchange
As geographical neighbors, the United States and Mexico have a long and mutually beneficial energy relationship. For many years, Mexico has been one of the top suppliers of crude oil to the US, which has reciprocated by sending significant volumes of refined products to Mexico. Mexico is also the largest net importer of US natural gas. Both countries are now exploring ways to further increase their ties. PEMEX, Mexico’s state oil company, has applied for a swap transaction that would involve importing heavy Mexican oil into the US in exchange for equivalent volumes of light US crude oil. What is the background of this proposal and how would it impact the crude oil and petroleum shipping markets in the Caribbean and beyond if it was approved?
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