Cloudy With a Chance of Rate Falls

2 Oct 2015: The impact of lower US production on the Jones Act.  The U.S. Flag tanker market has received a boost from the increase in domestic U.S. crude oil production, in particular from tight oil formations in Texas (Eagle Ford and Permian Basin), North Dakota (Bakken) as well as other (smaller) fields. Tight oil production increases pushed U.S. crude oil production from 6.0 million b/d (mb/d) at the end of 2011 to 9.4 mb/d in 2014 and rates for Jones Act tankers, ATB’s and barges followed suit (see Fig. 1). However, Jones Act shipping rates weakened in 2015 as the prospects for further growth in tight oil production started to dim. Is this a temporary dip or are we at the start of a prolonged downturn? Download here