vlcc rate are determined by supply and demand .. not oil prices .... ship now in storage are offline for transport... long term rates will remain strong thus killing your theory
by mid JAN it had recoup all the drop and added on another 20%. Its all about earnings. Even with a float of 150MM shares ..when the make $300-350 MM with these rates we are still looking at $ 2 EPS.. Lower then I would have hoped but mgt wans to clear out the debt without concerns if rates suddenly drop.. Wish they would have paid out of cash flow .. but $2 EPS will put this at $10-12 but December. Not a bad return
for the last time the price of oil has limited consequence for FRO .. they are paid in shipping rates that can stay high even if oil price rises.. supply/demand for ship are directly effected by how many went /go into storage removing supply of ship for transport. Contago can continue with higher oil and lso demand for oil will not necessarily drop with high spot if the UD $$ drops.
fro is paid by rates not the price of oil. rates are high and will remain a ships are in storage thus less for transport doen the road. Oil price will rise but that will not curtail demand because the us $$ will decline from historic high level vs euro which will offset higher oil price rise in relative terms.. Shipping rates holding at these lever for a few quarter and FRO eps between $2-4 mean a $10-15 stock price
false concept that oil strength will hurt FRO.. while contago came into effect due to the collapse of Oil prices ... as more ship are taken off inventory as storage for 1 year ++ tanker rates will remain high even if oil rebounds.. its rates that pay FRO profits not OIL
conception that FRO trade contra to oil price .. now both hedge and fro up ... !!
samps right .. looking back at 2007 -9 contango can continue even in rising oil prices thus rates .... which is how fro and tankers make $$ stay strong ...if enough tankers go into storage the demand for rest for transport can even grow ..
contango can last for years ...(2007-09). average storage time is 1 year w/ options for more time .. so ask yourself with FRO earning $4-5 per share this year what price should it trade...
how -bout-it said it right... my pick for 14 does need an oil rally .. supply is being stored in tanker with cantago .. fro now has 5 (that 10 million barrels) in storage and demand will start to pick up eventually when the US $$ slides. But it is all about the US $$. Not the recent Euro QE but the long push since June 2014 by the fed and trading desk to crush the rubble and ISIL. The bottom is in for OIl but don't know when is rises... but things are getting close... A Manipulated US $ caused the short term demand decline so the reverse is possible and once the US $$ starts to slide Oil demand will increase just because it's cheaper in Euro terms ect.ect.. the fall could be mirrored by an equal rally ... go long and strong at these levels .. and wait for a few quarters