OPEC Curbs To Stop Winter Tanker Upturn
Tuesday, January 18, 2000
Tanker markets are finely balanced but OPEC production cuts compliance will stop the shipping industry benefiting from its usual winter upturn, investment bank Morgan Stanley Dean Witter said.
However, there was a bias toward overcapacity as new tonnage was delivered and OPEC cutback compliance continued at high levels for another quarter, the firm said.
Morgan Stanley added that it expected shipping rates to respond positively if OPEC increased production volumes in the second half of the year. However, OPEC producers have suggested in the past few days they may extend the cutbacks throughout the year.
Morgan Stanley said utilization rates for the total tanker fleet fell to 88 percent in 1999 from 91 percent the previous year. Rates tended to react favorably once past the 90 percent mark, it said, but hit cash running costs much below this level.