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JPMorgan Downgrades Oil Shippers En Masse, Prefers Product Tankers Instead

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JPMorgan Downgrades Oil Shippers En Masse, Prefers Product Tankers Instead

The global oil market may now be at its most critical point of the entire downturn, and JPMorgan analyst Noah Parquette believes that tanker investors should re-think their strategy headed into 2016.

Despite VLCC rates near $100,000, tanker stocks mostly traded sideways throughout Q4. Parquette sees this action as an indication to rotate from companies with exposure to crude prices and into companies with product tanker exposure.

"While we expect 2016 rates to remain relatively strong, we are significantly lowering our 2017-19 rate assumptions for crude tankers due to our new view on the supply/demand balance as 1) vessel deliveries accelerate, 2) demand growth slows (global crude production), 3) crude inventory drawdown occurs, and 4) vessel efficiency improves," Parquette explained.

Related Link: Deutsche Bank Says $55 Oil Predicted Weeks Ago Now Seems Unreasonable

JPMorgan downgraded DHT Holdings Inc (NYSE: DHT) and Euronav NV Ordinary Shares (NYSE: EURN) from Overweight to Neutral and Teekay Tankers Ltd. (NYSE: TNK) from Overweight to Underweight.

The firm maintains its Overweight ratings on Tsakos Energy Navigation Ltd. (NYSE: TNP), Navios Maritime Acquisition Corporation (NYSE: NNA), Ardmore Shipping Corp (NYSE: ASC) and Scorpio Tankers Inc. (NYSE: STNG).

Disclosure: the author has no position in the stocks mentioned.

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Jul 2020RBC CapitalMaintainsOutperform
Jul 2020NeedhamMaintainsBuy

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