Oil Tanker Rates Lowest Since 1997 as Demand in Europe Plunges to 1996 Level, Production in US at 13-Year High; IMF Smoking Happy Dope

Bloomberg reports Oil Tankers Squeezed as Rates Drop to Lowest Since ’97.

Aframaxes, already this year’s worst- performing oil tankers, are poised for the lowest annual rates in at least 15 years as Europe’s economic stagnation curbs demand, the region’s most-accurate shipping analysts said.

The 800-foot vessels will make about $12,000 a day in 2012, the least since 1997, said Anders Karlsen, an analyst at Nordea Markets in Oslo. His recommendations on the industry returned 25 percent in the past year, more than any shipping analyst in Europe tracked by Bloomberg.

The vessels are struggling to win cargoes on all sides of the Atlantic, with European oil demand contracting for a sixth year at a time when the U.S. push for energy independence is driving down crude imports to the lowest since 1999. That’s drawing more South American and West African supply to Asia on routes favoring very large crude carriers, displacing smaller Suezmaxes which in turn are competing with Aframaxes.

“With the situation in Europe, the picture for Aframaxes is just abysmal,” said Erik Nikolai Stavseth, an Oslo-based analyst at Arctic Securities ASA who anticipates an annual average of $10,000. “VLCCs are taking out Suezmaxes, and Suezmaxes are taking out Aframaxes,” said Stavseth, whose recommendations returned 24 percent in the past year, the second-best performance in the region.

European oil demand will decline 2 percent to 14.7 million barrels a day this year, the lowest since at least 1996, the Paris-based International Energy Agency estimates. The region’s refineries are shutting at the fastest pace in three decades as economies stagnate or contract and competition from U.S. rivals using cheaper grades of crude intensifies. Aframaxes get 48 percent of their cargoes from Europe, Clarkson estimates.

The U.S. is producing the most crude in 13 years after prices rose almost fourfold in a decade, Energy Department data show. Companies were drilling 2,329 wells last month, the most in a quarter century, the data show. Aframaxes rely on North America for about 14 percent of their cargoes, the same order of magnitude by which imports carried on the vessels will fall this year, according to Clarkson.

The slump in European demand may reverse as its economies strengthen, with the International Monetary Fund predicting 2013 growth of 0.9 percent in the 17-nation euro zone, from a 0.3 percent drop in 2012.

Comments From Tim Wallace

Reader Tim Wallace says ...

Hello Mish

EU demand is dropping along the same lines as USA, six consecutive years of decline, now equal to 1996 levels. USA oil consumption is at 1998 levels.

How can anyone not see the global economy never recovered from 2008? Only government debt spending has kept the economy from the abyss. As you know that is nothing but a misguided can-kicking exercise.

IMF Smoking Happy Dope
 
To that I would add the IMF is smoking "happy dope" to believe the eurozone will contract a mere .3% in 2012 and expand at .9% in 2013.

Moreover, the US economy is clearly slowing rapidly and is likely in recession right now.

I will have the latest US 3-month oil usage charts from Tim Wallace shortly.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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