(Not So) Happy New Year!

12 Jan 2018;

Shipowners typically look forward to the winter.  As the weather gets colder, the tanker market starts to heat up.  There are a variety of factors that contribute to this seasonal improvement in the markets.  Colder weather in the northern hemisphere boosts energy demand, while winter storms in the north Atlantic, ice in the Baltic and fog in the Black sea reduce fleet productivity in the winter months.  As can be seen in the chart of VLCC rates (which is normally fairly representative of all tanker markets), in a “normal” year, the first and in particular the fourth quarter show the highest earnings.  As the fourth quarter of 2017 started, it appeared to follow the normal seasonal pattern, but rather than strengthening through November and December, rates plateaued and turned down towards the end of the year and remained depressed into the new year.  What caused this counter seasonal slump in tanker rates, and (how long) will it last?

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