When you look at supply and demand for oil and how that relates to FRO you would think if oil goes up so does FRO but so far that has not been the case.
Supply and demand of ships on the market is still the glut killing the tankers.
Of course anybody who post anything positive about FRO is labeled a cheerleader by us bitter posters who have lost a ton on money on the stock and blamr the world
That's why we use politics as a tool to clutter the board
First, you have it completely wrong. If oil goes down, that's when tankers get leased to take advantage of lower crude prices...that doesn't happen when crude goes up...think about it, why buy crude at higher prices?
Second, a recent article states that China has backed away from ship building and is turning to ship scraping
The price of oil is a moot point here. If the price goes way up, it doesn't mean more people will buy it and need it transported. Besides, two of the big users are in a position to build and haul their own. That is China and India. They need FRO like you need 3 thumbs. The glut is out there. Natural gas will be a big energy item in the next few years as oil gets cut back. FRO's tankers don't haul NG. Besides, US natural gas use in the future will require few tankers, as pipelines will be used. China will build all their own ships, or at least if I was running China, I would insist on it. Why send money to a Norwegian when you can keep it in the borders. We used to have a merchant marine, threw it away, and our balance of payments has been awry ever since. It isn't like JF can undercut the Chinese in hauling Chinese oil. Besides, if the Chinese build too many tankers to haul their own stuff, they can just haul for others and compete with JF. You are correct in that there is a glut killing tankers and I don't expect the cure for that to come quickly.
China has to understand they can't restrict trade and expect the rest of the world to be willing trading partners.
Eventually unemployment in the rest of the world manifested by WTO violations in China will result in fundamental changes in world trade.
If China wants to make money in world trade they have to start doing some sole searching real soon or it will eventually come to a significant decline as other world governments file WTO complaints and slap on trade restrictions.
The Chinese Peoples Liberated Army Navy (PLAN) now has vast manufacturing facilities in duel role, that require the commercialization aspect in order to pay the growing demands of their military.
If they buy their own tanker fleets and remove all other outside interests, then they are no longer reasonable trading partners.
Either they learn two way trade and realize they can't do everything themselves and lock out foreigners, or soon, they will be surprised to learn, their customer base just collapsed and the Chinese government will most likely face an internal civil war in the aftermath of a financial collapse.
At the end of at least 8 major Chinese dynasty's they could be marked by increase in corruption. WTO violations on a wide scale is extreme corruption.
China hasn't had to face a large pushback, it will come if they enact what you recommended, build their entire tanker fleet and lock out foreigners.
I suspect at some level in Chinese government, they understand that. Nevertheless there is still old timer Mao lovers that want to go back to Mao's failed thesis.
Deng Xiaopeng is rolling over in his grave right now. He would detest the level of corruption in China now and would state it is marking another end to a Chinese Dynasty.
What is killing FRO is all the short sellers. That too will one day change soon.
America needs 20% of the worlds crude oil supply (world = 85 billion per year).
Our oil production is slowly shrinking, so eventually more crude oil will have to be tanked in.
Europe is in far worse condition than the US, and soon China will be 10 times worse.
Japan has to have almost 100% of its crude oil tanked in.
Taiwan, and other wealthy states need a lot of crude oil and petrolium products tanked in.
The need for tankers will increase. As the tanker fleet starts to wear out they have 2 choices, more dry dockings and prime mover repairs or new builds.
Tankers will be ok, one just has to learn how to be patient and make gains in a variety of sectors.
The glut will not be worked through for another 12 - 18 months.
This is dead money, and at best an extremely risky gamble. I've said it time and again since I sold this @ $18 that this was an unprecedented situation.
More than a year later here you are churning at $5 - 6 per share.
There are a lot of factors to consider. But the overcapacity is the largest one. When that is outpacing demand, you cannot get pricing power. Too many ships.
While the world always needs more oil year to year, there are mitigating factors. The economy is tepid, slowing demand for oil and other energy sources. Automotive technology is creating vastly more fuel efficient vehicles.
US domestic production is skyrocketing. Did you not see that the Bakken Shale formation is projected to produce 1.5M BPD? It's already producing 500K BPD.
And no offense, but you've been saying buy buy buy FRO since I've been on this board.
That's worked out how well for ya?
There are far better places to put your money.