|We have seen OPEC can't stand up for falling down, the decision by Saudi Arabia Not To Attend The Non-OPEC Oil Meeting Monday . What traders forget and certainly OPEC does is the decisions and reactions affect all levels of the energy supply chain.|
A particular group waiting the outcome is shippers, specifically crude oil tankers. If at the Nov. 30 Vienna OPEC meeting they limit output to as little as 32.5 million barrels a day that removes five supertankers a week.
Analysts are aware of the negative pricing actions in such a scenario Erik Stavseth from Arctic Securities ASA in Oslo said; “Forecasts will be reduced, it won’t be easy to replace the lost output in the Middle East. Lower production will mean higher oil prices that will push demand lower and hurt the shipping industry.”*
Supertankers or the "very large crude carriers" are currently predicted to earn $31,000 a day in 2017, according to 13 analyst forecasts compiled by Bloomberg this month. The estimated rate is more than 15 percent lower than anticipated in August. Benchmark earnings averaged about $40,000 a day so far this year, compared with about $68,000 a day in 2015.
Demand for crude tankers normally rises in the fourth quarter as oil refineries increase the amount of crude they process. We have seen massive imports of crude in India, China and the US since the Algiers accord with loadings from the Middle East surging. Much of this of course was gamesmanship to get higher production levels for each producer and the banks and importing nations complied.
Another analyst; Magnus Fyhr, managing director at Seaport Global Securities LLC echoed similar sentiments. Fyhr said “The cut will have a big impact on the shipping market, the rates could be cut by $5,000 to $10,000 from the current forecast levels as it will remove demand.”*
Per Mansson, a ship broker at Affinity Shipping LLP in London said “ A decision to cut output will mean higher oil prices, lower demand and trade and bad business for tankers”.*
The OPEC Nov. 30 meeting intention was to finalize the Algiers deal to bring production down to a range of 32.5 million to 33 million barrels a day. However OPEC pumped 34 million barrels a day in October, according to data compiled by Bloomberg. (see the reference to gamesmanship above)
Ship brokers and tanker owners are in the camp of hoping for no cuts or a freeze at the higher level. Just another group wary of unintended consequences from OPEC.
*Hellenic Shipping News
Source: Reuters, TradersCommunity, Hellenic Shipping NewsMore Energy News Norway Troll Oil Production To Highest Output Level Since 2009 Singapore Planning to Invest over $1B in Offshore Oil and Gas Projects From Istanbul to Vienna The OPEC Oil Production Deal Schedule Major Oil & Gas Firms Stay Away from India Gas Field Auctions
Check out OOTTNews.com
for the latest news and data on Forex and Oil markets.From the Traders Community News Desk