At MarineMoney's New York City event earlier this summer, tanker operators were in a somber mood, and Michael Reardon, Manager Global Strategy and Freight Traiding, ConocoPhillips, was quoted as saying: “Floating storage took VLCCs out of the market and sent false signals to the market ... We are at or near the bottom; things can get worse, but not much worse.”
Don't look now, but things have gotten worse.
Yesterday, in an Associated Press report, a Jefferies analyst downgraded shares of Overseas Shipholding Group Inc. and Frontline Ltd., saying the economy won't grow fast enough to stimulate oil production and boost rates for tanker companies by the end of the year.
While IEA's decision in late June to release oil from emergency stockpiles reduced and delayed tanker charter rate rebound expectations into the fourth quarter, there are significant concerns that the stalled global economy simply will not provide the push needed for a significant rebound.
Many tanker companies, including OSG and Frontline, are trading at 52-week lows.