Jefferies Optimistic Of Crude Oil Market (DHT, TBSI, DRYS, GMR, FRO, BALT)
OPEC's update of its 2011 global oil market demand forecast causes Jefferies to believe in eventual sector growth, according to a research report published today by the company.
"Although we believe the crude oil tanker market is likely to remain volatile in the near term, we believe the longer-term outlook is attractive as the improving global economy is likely to cause OPEC to increase production in the coming months. We believe the dry bulk shipping market should remain volatile as well, given the improving outlook for global industrial activity but significant shipyard deliveries," Jefferies states.
OPEC's forecast increase of 200,000 barrels per day may provide a positive stimulus to the sector, Jefferies notes.
"While global oil inventories remain above OPEC's preferred levels, we continue to believe improving global oil demand will continue to deplete global crude oil inventories to the point that OPEC will likely increase production by mid-2011 providing a significant positive catalyst for the majority of crude oil tanker companies under coverage," Jefferies states.
DHT Holdings (NYSE: DHT), TBSI International (NASDAQ: TBSI), and DryShips (NASDAQ: DRYS) outperformed the Jefferies shipping index last week, while General Maritime Corporation (NYSE: GMR), Frontline (NYSE: FRO), and Baltic Trading (NYSE: BALT) underperformed, Jefferies states.
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