Shipping companies who move oil could be one set of losers following OPEC's deal to cut production for the first time in eight years.
"Shipping is a volume game, so higher OPEC production has supported the tanker rates over the past few years," according to Rahul Kapoor, director of Drewry Financial Research Services."We don't have the numbers yet... but if all were to come true in terms of cuts, this would be negative for the market."
Oil tanker rates have jumped to a four month high as traders booked the most-ever cargoes for this time of year, offering signs that Middle East producers could be adding barrels to the market just before OPEC cuts.
Traders booked 141 spot cargoes for the month of October, the highest in at least 12 years, and dayrates on shipments from the Middle East to Asia jumped to nearly $46,900 while a surplus of crude tankers in the Persian Gulf matched the lowest level in a year, Bloomberg reports.
Teekay (TK +4.2%) “continues to enjoy strong support from its lenders and its major shareholder that are willing to provide additional capital to deal with the funding gap" from its $4.6B capex, Morgan Stanley says as it maintains its Equal Weight rating on the stock while raising its price target to $8 from $7.
Stanley says Teekay Offshore Partners (TOO +4%) is close to completing its capitalization plan, which is expected to improve liquidity while deferring any funding gap to after 2017, while the funding gap for Teekay LNG Partners (TGP +1.2%) appears to be narrowing, with management expecting high newbuild financing.
However, the firm also notes that TOO continues to have the highest exposure in the group to high dilution risk, given its expiring offshore contracts, large debt maturities and aging assets.