Tanker rate slump signals retreat in U.S. oil imports; Frontline seen suffering

|About: Frontline Ltd. (FRO)|By:, SA News Editor

The biggest slump in tanker rates since January is signaling weaker U.S. oil imports and spurring analysts to predict a 15-year low for shares of Frontline (FRO -1.9%).

Rates for the biggest crude carriers sank 68% in the past two weeks, more than reversing their advance since the end of June; the rise is seen as a blip, as the U.S. meets the highest share of its own energy needs in three decades.

Rates for VLCCs, each hauling 2M barrels, fell to $7,954/day on Aug. 2 after rising as high as $24,493 on July 12; earnings last exceeded the $25.5K that FRO says it needs to break even in November.

While U.S. oil production is bearish for crude tankers, it’s boosting demand for ships to export refined products, chemicals and liquefied petroleum gas; Scorpio Tankers (STNG) is expected to benefit.