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Tanker demand and freight rates are generally a reliable indicator of the characteristics and trends of oil demand. They are also part of the factors that, taken together, might suggest what the future holds for the oil industry. Recently, petroleum demand and tariffs have revealed a shift in supply patterns and caused some concern about OPEC compliance rates. This, however, can only be short-lived.
The concern was sparked by the rebound in tanker rates, which went from $ 15,000 a day earlier in February to double that of last week. William Watts, of MarketWatch, reports that the rebound provoked a brutal reaction from traders, immediately concluding that OPEC producers had failed in their agreement to cut production: higher rates implied greater demand for oil tankers and as a result, more crude entering the market.
In fact, this is also the case now, except that it is not the oil of the Middle East that arrives in greater quantity on the market. US light crude oil is being pumped at a faster pace as most OPEC members cut production to support prices, with the exception of Iraq, Iran and Venezuela. The latter two are witnessing a decline in production for other reasons as Iraq moves ahead with plans to increase production and exports. But it's the only one to do it, it seems.
Earlier this month, Bloomberg announced that tankers were leaving Middle East ports carrying salt water to the United States, where they would load US light crude and transport it to various markets. import. Firat Kayakiran of Bloomberg noted that OPEC production was declining and that US production was increasing, tankers were moving where they were needed.
Yet, it seems that the rise in US light crude destined for export is only a factor supporting oil demand this year. Teekay Tankers recently announced that demand for tankers would remain tepid during the first half of the year mainly due to reduced production of OPEC. However, the situation will change in the second half of the year as prices rise and stabilize. In addition, this year will see the addition of some 2.6 million bpd in new refining capacity, which will also increase the demand for crude oil deposits and crude oil itself. At the same time, oil hits record highs in 2019 as a trade agreement hopes to drive up prices
Another upside for demand for oil and oil is the new set of emissions regulations of the International Maritime Organization that will come into effect next year. These new rules will reduce the maximum allowable amount of sulfur in marine emissions by 3.5% from 3.5% to 0.5%, resulting in an explosion in the demand for low-level bunkering fuel. sulfur. Of course, this would mean a boom in demand for the crude used to produce it.
According to a Bloomberg survey of analysts earlier this month, daily tanker rates average $ 29,200. This is up from last November's forecast, as crude oil and tanker prices fell to unprecedented levels as concerns about demand pressure from slowing global economic growth.
It seems that, regardless of the choice of some traders in the changing demand for oil tankers, OPEC cuts will continue to boost prices in the near term. The new IMO rules, particularly the demand for heavy crude oil, will boost demand: Middle Eastern producers are reducing their production of heavier grades and, with the collapse of Venezuelan production, a shortage could raise the prices.
By Irina Slav for Oilprice.com
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