Crude Oil Tanker Market Likely To Remain Volatile In Near-Term: Jefferies

According to Jefferies, “Last week, crude oil tanker spot charter rates declined sharply with average VLCC spot charter rates down more than 30% to approximately $35,000 per day and average Suezmax spot charter rates down nearly 30% to approximately $19,000 per day. Nonetheless, not only do QTD spot charter rates continue to compare favorably with 3Q10 estimates, but, spot charter rates remain at very firm levels ahead of what is likely to be a seasonally stronger charter rate environment beginning in the fall ahead of what could be an even stronger charter rate environment in the spring when OPEC could begin to increase production levels.” “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, which should stimulate crude oil tanker demand. We believe the outlook for the dry bulk shipping market remains attractive given the improving outlook for global industrial activity,” the analysts add.