World Economy Poised for Faster Growth Says Oil Report
The world economy is set for faster growth now that it has achieved escape velocity. Current low oil inventories and stock declines are supporting strong prices. Key light product inventories are low, with distillate vulnerable to a spike with very cold weather. Brent-Dubai will be fairly wide in January and February before narrowing sharply in April. Political risks were muted in December, but are still very much present. Another Large U.S. Inventories fell this past week, slightly surpassing the week earlier decline, and bringing the total decline to over 70 million barrels over the last nine weeks, the largest decline for this period since 1999. Inventories are now 3.6% below year ago levels, with stock deficits in all of the major categories.
Strong Market Continues
In 2000, VLCCs obtained $53,000 per day, up from less than $20,000 in 1999. Old VLCCs reached $33,000 per day compared with only $11,000 in 1999. The freight market boom also had its effect on medium size crude carriers. After poor market conditions in 1999 with modern Suezmaxes obtaining $15,000 per day the average in 2000 was $40,000. Corresponding figures for modern Aframaxes were $13,000 as an average in 1999, reaching $37,000 in 2000. Peak rates in the year for both types were recorded in December at $60,000 per day. Large clean carriers (LR2) last year obtained $32,000 per day, which is $18,000 higher than the 1999 level. Modern MR types rose from $8,000 per day to $16,000 per day in year 2000, with more than $30,000 in December.
