By OGJ editors
HOUSTON, Apr. 22 -- The tanker equity market outlook is promising because improving oil demand coupled with low crude oil inventories should stimulate increasing oil production and tanker demand, said Jefferies & Co. Inc.
Analyst S. Magnus Fyhr said tanker shares remain attractive from a risk-reward perspective. He believes companies with modern tanker fleets are well positioned to benefit from stricter chartering policies and escalating regulatory pressure.
"Strong cash flow coupled with firming asset values should result in improved balance sheets and higher net asset values by the end of 2003," for tanker companies, he said.
He noted that Caribbean tanker rates have started to firm with the resumption of Venezuelan exports following a general strike in that country. He also sees more discrimination against single-hull vessels after the Prestige sank off Spain.
"In addition, we believe the EU's recent proposal to ban all single-hull tanker above 3 years of age from trading oil and oil products into the European Union will serve as a positive catalyst for tanker shares, as older single-hull tonnage is likely to be forced into early retirement," Fyhr said (OGJ, Apr. 14, 2003, p. 7).