Must-know crude oil tanker outlook: Some good news and bad news (Part 3 of 10)
U.S. seaborne crude oil shipments
As the world’s biggest importer of crude (unrefined) oil, U.S. weekly oil imports provide analysts, money managers, and investors with insights on the crude tanker industry’s shipping fundamentals. The weekly preliminary data, supplied by the EIA (Energy Information Administration), is published mid-week and refers to data for the week ended the prior Friday.
For the week ended April 18, 2014, U.S. crude oil imports averaged 3.8 million barrels a day, down from 4.4 million barrels a day from the prior week. Based on the last four weeks of data, crude oil imports rose from 3.5 million barrels a day for the week ending April 11 to 3.8 million barrels a day. Year-over-year growth, based on the last four weeks of data, rose to 0.3% from the prior week’s -9.5%—an improvement.
Effect on crude tankers
Based on imports from countries such as Kuwait, Colombia, Venezuela, Saudi Arabia, Iraq, and Brazil, four-week moving average year-over-year growth jumped from -0.98% to 8.69%. Although domestic oil production is surging on the back of hydraulic fracking and horizontal drilling, much of the oil found in the United States is of high quality, which several refiners aren’t designed to process. It appears U.S. refiners continue to import heavier and sourer crude oil for operation purposes.
Since tankers are used to transport oil across the water, seaborne suppliers are more relevant for the Guggenheim Shipping ETF (SEA) and tanker stocks such as Teekay Tankers Ltd. (TNK), Tsakos Energy Navigation Ltd. (TNP), Nordic American Tanker Ltd. (NAT), and Frontline Ltd. (FRO).
Browse this series on Market Realist:
- Part 1 - Why crude oil tanker shipping rates are treading above 0 growth
- Part 2 - Must-know: US implied oil demand gives up 2013′s growth
- Part 4 - Why oil tankers could benefit as US refiners finish maintenance
- Commodity Markets