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Soaring tanker rates show oil supply glut persists

May 28, 2015 11:15 AM ETFrontline plc (FRO) StockFRO, TK, NAT, GLNG, DHT, TGP, TNP, TNK, TOO, STNG, EURNBy: Carl Surran, SA News Editor12 Comments
  • Despite crude oil’s rebound from six-year lows, the tanker market is sending a clear signal that the rally is under threat, according to a Bloomberg analysis.
  • A surge in demand for supertankers drove benchmark charter rates 57% higher in the two weeks through May 20; OPEC will have almost 500M barrels of oil in transit to buyers at the start of June, the most this year, while analysts say ~20M barrels is being stored on ships in another indication the supply glut has yet to dissipate.
  • Daily rates for supertankers on the industry’s benchmark route reached $83,412 on May 20, from $52,987 on May 6, according to the Baltic Exchange; while rates have since retreated to $65,784, they are still the highest for this time of year since at least 2008.
  • "There still seems to be a lot of physical activity, a lot of oil on the water," says the head of research at Hartland Shipping in London; while Q2 is usually quieter as refineries switch to summer fuels for the Northern Hemisphere, “the market is still busy and rates are incredibly high.”
  • Relevant tickers: FRO, TK, TNK, TOO, TGP, TNP, GLNG, STNG, NAT, DHT, EURN

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