Commercial analysis




Product trades and refinery capacities

Of the most important indicators for the futures oil product trades are developments in the refineries.  The Paris-based International Energy Agency’s (IEA) Medium Term Report offers details of refinery capacity expansions, and additions, until 2021. The largest refinery expansion according to planned projects is the Middle East, which expanded by 0.417 mbd in 2015, and is expected to expand by...... Login to view this article


Oil market expected to balance end 2017

According to the US-based Energy Information Administration’s (EIA) short-term outlook as issued this week, US crude oil production averaged an estimated 9.4 mbd in 2015, and it is forecast to average 8.7 md in 2016 and 8.2 mbd in 2017. The EIA estimates that crude oil production in February averaged 9.1 mbd, which was 0.08 mbd below January’s level. US oil production is one of the most essenti...... Login to view this article


What did you learn in school today?

INTERTANKO’s Senior Manager, Research and Projects, following a week of seminars and meetings on the subject, offers his take on the state of the oil and tanker market. ------------------ “I have been to three short seminars this week at DNB, Bloomberg and the Paris-based International Energy Agency (IEA) and I had hoped that I would see the situation in the oil and tanker market more clearly....... Login to view this article


Oil trades will continue to increase, but not by much

The Paris-based International Energy Agency’s (IEA) Medium Term Report says that global trade is yet to peak but will climb steadily to hit 27 mbd in 2017 as consuming economies take advantage of low oil price to build inventories. US imports are set to rebound as domestic production slows. Thereafter, traded volumes will decline as refiners are forecast to draw inventories and US production...... Login to view this article


Looking back… and to the future

Looking back at the most important trends in the tanker market we see that the fleet development has grown much more strongly than demand. The below graph shows the trends in oil consumption, trade in tonne miles, average distances sailed and the fleet as indices starting at 100 in 1973. Converting the trends to indices allows us to see the relative development between the different trends. Mos...... Login to view this article


Surging liquefied natural gas trade

A report written and published in accordance with the Atlantic Council Policy on Intellectual Independence predicts that a surge in new supplies of liquefied natural gas (LNG) will hit the global market over the next several years. LNG export projects already under construction worldwide will add up to 175 billion cubic metres of LNG capacity by 2020, mainly from Australia and the United States...... Login to view this article


Wild cards in the tanker market

Demand for tankers was exceptionally high in 2015 for three reasons: OECD stocks were, according to the Paris-based International Energy Agency (IEA), built by two million barrels – or a VLCC load per day – and in addition Chinese strategic reserves were increased. China seized the chance to add up to 147 million barrels to its reserves in the first eleven months of 2015, according to Reuters’...... Login to view this article


Tension abounds in the oil and tanker market

We have witnessed a weakening of the tanker market and freight rates have been on the way down over the last days – while the Brent Blend oil price, after having breached the $30 per barrel level on the way down, has strengthened again.  One reason for the recent price increase was said to be rumours about possible oil co-operation to reduce production, but these rumours have to some extent bee...... Login to view this article


LNG recovery to take time despite strong demand growth

DNB Markets says that, despite 2016 being set to be the first year since 2011 with significant demand growth for LNG shipping, they estimate only a USD4k/day uptick in rates in 2016 due to close to historically weak fleet utilisation. Looking for upside potential, DNB highlights vessels rolling off old contracts becoming obsolete. DNB has only marginal changes to our 2016–2018 LNG trade...... Login to view this article


What can 2015 figures teach us on the 2016 tanker market?

The tanker market in 2015 will stand out as one of the best in history for big ships. The main reason for this is that global oil supplies expanded by 2.6 mbd in 2015, following gains of 2.4 mbd in 2014. Supply, though, cannot continue to increase stronger than demand as there will be a limit to stock building, even if the low oil price in the short term may stimulate the use of tankers as...... Login to view this article


Drama in the oil and tanker market

Oil is the most important strategic commodity in the world and the sharp plunge in oil prices have both economic and political effects, and will have an even greater impact should the low oil price continue for some time. But is it sustainable in any market that the price for a product is double the break-even rate for the marginal producer over a prolonged period? The tanker market has indeed...... Login to view this article


Fixing levels remain steady but longer hauls prove the difference

Last year, 2015, was one of the best ever for VLCCs. According to spot fixture data from McQuilling Services though, the number of fixtures was exactly the same as in 2014. That said, where the fixtures in the largest trade AG to Far East declined 8.3% (678 fixtures in 2015), the longer haul Americas-East increased by 20.3% to 172. The number of reported fixtures West Africa to India also...... Login to view this article


Increase in LNG exports accelerating

In an article in Kapital/Norway , the Market Analyst from Nordea, Axel Styrman, estimated that an overcapacity of 50-60 modern LNG tankers or about 20% overcapacity. This came as a consequence of high contracting activity after the Fukushima accident in Japan 2011, when the LNG import and demand for LNG tankers increased strongly. In addition there have been serious delays in the starting up of...... Login to view this article


Consequences of the change in the bunker price in the 2016 Worldscale book

The dramatic fall in the crude oil price has caused a similar fall in the bunker price, which is at the lowest level since 2004. This means that the bunker price used by the Worldscale Association has not reflected the market price. The bunker price used in the Worldscale (WS) book for 2015 was US$614.81 per tonne, whereas the new price for 2016 will be US$367.55 per tonne. The current bunker...... Login to view this article


Timing is everything

Tanker rates are over USD100,000 a day for a VLCC. The reasons for such high rates are high oil demand, oil stocks built up at record levels. The productivity of the tanker fleet is also low because there are delays in ports with the fleet still trading at reduced speed. Oil demand is by a large extent driven by a low oil price, which this week fell below USD40 a barrel. Low oil prices stimulat...... Login to view this article


Declining Asian LNG imports

Eastern Asian LNG imports dropped by 4.2% year-on-year in Q3 2015. According to Global Energy Hub, LNG gross imports dropped by 4.2 % year-on-year in Eastern Asia in Q3 2015. In Japan, South Korea, China and Taiwan LNG imports declined by 1.6 million tons from 38.1 million tons in Q3 2014 to 36.5 million tons in Q3 2015. In Japan, LNG imports were cut by 5.6% down to 20.9 million tons as...... Login to view this article


Stocks at record levels – IEA Oil Market Report

According to the Paris-based International Energy Agency (IEA), global demand growth is forecast to slow to 1.2 mbd in 2016 after surging to a five-year high of 1.8 mbd in 2015. Momentum eases towards its long-term trend as recent props – sharply lower oil prices, colder-than-year earlier winter weather and post-recessionary bounces in some countries – are likely to give way. Global oil supplie...... Login to view this article


Fleet growth

After moderate fleet growth in 2013/14, the growth is now picking up and could be around 3% in 2015, possibly rising to 6% in 2016 depending on sales for decommissioning. There have been very few sales for decommissioning so far in 2015 and with the strong freight market, scrapping activity is not expected to pick up. In addition to sales for decommissioning, we have recorded three VLCCs sold f...... Login to view this article


VLCC spot activity down

We are witnessing a strong crude tanker market, which for obvious reasons indicates strong activity. Spot chartering fixtures from McQuilling Services do, however, indicate that spot chartering activity for VLCCs up to October has generally declined in 2015 because chartering AG – Far East saw a decline. This could be because more cargo has been carried on Chinese-owned VLCCs, while we also hav...... Login to view this article


Plunging rates

VLCC rates peaked 5 October at $106,381 for the Baltic Benchmark route TD3 – Middle East – Japan, declined to below $50,000 per day but increased on Friday to above $60,000 per day. Both the aframax N Sea to Continent and the suezmax West Africa – Continent has improved over this period and the tanker crude oil tanker market is strong for all segments. What are the prospects? There is still an...... Login to view this article

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Bill Box
Senior Manager, Commercial
P: +44 20 7977 7023