The tanker market is expected to keep finding support from US oil exports moving forward. In its latest weekly report, shipbroker Gibson said that “as the US oil sector recovers from several challenging years,
Reducing Capex
According to Gibson, shale producers are now focused on reducing CAPEX and creating value for investors through M&A and share dividends. Whilst 2021 and 2022 saw growth in rig numbers, 2023 has been challenging. Inflationary pressure, labor shortages and concerns about oil demand have all played a role in seeing rig counts fall once again. The use of operating revenue for share buy backs and dividend increases instead of additional E&P expenditure is likely adding to falling rig counts. “Nevertheless, a new trend has emerged in which despite falling rig numbers, US oil output has been steadily increasing in line with the aim of many operators to increase the efficiency of their projects. In order to make this happen, operators are seeking to maximize recoverable oil at these sites through a combination of new drilling technologies and enhanced oil recovery (EOR) techniques…” the shipbroker said.
Growing Demand
The IEA is forecasting total US oil production (excluding NGLs) will average 12.7 mbd and then increase to 13 mbd in 2024. How does this impact the tanker market? In theory, higher crude production going forward should mean more cargo for export. However, whilst US crude exports are currently averaging 3.8 mbd in 2023, up from 3.37 mbd last year, flow data shows declining monthly exports since March as US refinery utilization has risen seasonally, Gibson noted.
“Nonetheless, growing demand for US crude will continue to support export volumes. Short term headwinds from higher seasonal domestic crude demand will limit the potential over the summer months, yet in the long term, continued US production growth will translate into increased export volumes to the benefit of the crude tanker market”, the shipbroker concluded.
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Source: Hellenicshipppingnews
