maximax

Investing in Tankers: Ship, Ship, Hooray?

Jan Sopoci - I don't know what the seasonal aspect was that was discussed on SA, but seasonality has not worked well for tanker rates in recent years. crude and product tankers used to correlate/cointegrate until a few years ago, but don't really do so anymore. crude rates taned to be strong during nov-jan (q4, maybe q1) but watch the oil stocks, if they are high and no contango, then refineries will feed themselves from stocks rather than from seaborne imports. ahead of summer driving season also tends to be strong i.e. april/may, but remember refineries are the tanker users, so watch the refinery margins. if they are high, oil imports go up. if they are weak, they go down. if refining margins for middle distillates are high, they will import medium/light crudes, now fuel oil is on the rise due to KSA stopping their fuel oil exports, so expect an increase of heavy crudes. this affects trading patterns of tankers, which in turn affects trading distances and therefore tanker supply. refinery margins are ignored in the above article, and the ytd rates development is misleading - crude rates have been excellent ytd until roughly a week ago, but now they are not good, and oversupply is indeed an issue. But Q3 is often bad for tanker earnings.