OPEC+ shocked the market in early March by keeping production cuts in place. Definitely not what the tanker industry wanted to hear. In typical fashion, it was spun as good news for shipping: Spot-rate pressure would be even worse in the near term, but the pain would end quicker as oil inventories drew down faster. .
Light at end of the tunnel for battered tanker trade?
Product tankers are recovering more quickly than crude tankers Better rates could be around the bend (Photo: Shutterstock/Lucas Nightingale)
OPEC+ shocked the market in early March by keeping production cuts in place. Definitely not what the tanker industry wanted to hear. In typical fashion, it was spun as good news for shipping: Spot-rate pressure would be even worse in the near term, but the pain would end quicker as oil inventories drew down faster.
OPEC+ surprised the market yet again in early April this time by finally agreeing to increase production. This is what tanker owners had been hoping and expecting to hear four weeks earlier.
Full steam ahead for Wall Street’s shipping stocks
After a decade of head fakes and disappointments, investors can be forgiven their skepticism toward shipping stocks. Add to that the pandemic unknowns. As Diamond S (NYSE: DSSI) CEO Craig Stevenson said on Friday’s analyst call, “The trouble is that you’re predicting something [the COVID recovery] that has not happened before. There is no history.”
And yet, there’s no denying the positive momentum for shipping stocks. Each sector continues to rise from a different liftoff point.
Container-shipping shares began their meteoric ascent in July, when it became clear that COVID made consumers buy more goods a lot more not less.