Lower growth rates for refinery throughput and drawdowns on swollen oil stocks has impacted the seaborne tanker market negatively. BIMCO expected this to happen.
The refiners and traders, primarily in Asia, have reduced their appetite for crude oil as margins and profits have diminished. Global oil prices came down from a mid-2015 level around USD 60 per barrel to bottom out just below USD 30 per barrel by mid-January 2016. Only to rise again and float around USD 50 per barrel from June onwards.
Seasonality (Q2 and Q3 normally seeing low demand) and record high global stock levels of crude oil and oil products have brought an end to the strong freight market enjoyed since the second half of 2014.
This development comes as no surprise. Back in January 2016, BIMCO warned, “that a ‘correction’ in demand may be fairly steep once it arrives”. The factors mentioned back then, are the same ones that matter today. For the oil tanker market – which has had the highest supply side growth in the last six years – a reversal of fortunes was inevitable.
Our sections on tanker supply and outlook can be read in the attached pdf or online here: https://www.bimco.org/Reports/Market_Analysis/2016/0905_TankerSMOO_2016-03.aspx