A Norwegian market analyst has hit out at the greed shown by both tanker owners and charterers in determining market levels, and says the current fall in freight rates is as unrepresentative as earlier highs.
Ole-Rikhard Hammer, head of research at Bassoe, told the imarkedet.no business news service that it was as wrong to push VLCC earnings to less than $50,000 a day as it had been to see $250,000 a day six weeks ago. "Charterers are as greedy as owners and they want to test how far down they can go,¡± he commented, adding that he expected that an expected drop in US crude storage levels should trigger a recovery in rates.
Fearnley¡¯s noted that 72 VLCCs will be looking for business in the Middle East Gulf in the next 30 days, the highest figure for a year. The broker has cut its estimate for 2005 earnings of VLCCs to $70,000 a day from $80,000.
Meanwhile, suggestions that the fall in tanker stock prices had been a consequence of the Indian Ocean tsunami have been dismissed by one financial analyst in New York, who told Fairplay he saw no ¡®direct link¡¯.
The comment followed a 3 January report by Citigroup Smith Barney analyst John Kartonas that identified ¡®a sharp correction¡¯ spurred by a 60% decline in freight rates following the end of the Caribbean hurricane season.
GenMar, OMI, Teekay and Frontline have all witnessed stock prices weakening by 26-34% since November. In Oslo Frontline hit NK360 in early December, but has slipped to NK273.5, which remains well above its 52-week low of NK114.2 in May.