Just a week after tanker ship owners were raking in enormous profits by chartering their vessels for oil storage, the market has suddenly turned against them as demand for oil continues to fall. Share prices in Norwegian companies like Nordic American Tankers (NAT) and Frontline have plunged since hitting new highs just last Monday.
“The hangover will be greater than the party,” shipping analyst Nicolay Dyvik at DNB Markets told newspaper Dagens Næringsliv (DN) on Friday. NAT’s boss bragged about big profits last week, but he can’t do so any longer.
Dyvik and his colleagues at Oslo-based DNB Markets now think only around 50 large tankers will be needed for storage in May, down from an estimated 200 a few weeks ago. Around 100 are currently at anchorage, storing oil while owners wait for oil prices to rise. The extra floating capacity won’t be needed later this summer and fall.
“We predict a weak tanker market over the next 12 months,” Dyvik told DN, putting the shipowners back in the company of other businesses hurting because of the Corona crisis and low oil prices.