Oil trade between Angola and China attracts investors to companies owning tankers

5 July 2010

Princeton, USA, 5 Jul – Sales of Angolan oil to China are stimulating investment in companies holding tankers and in fleet owners, the American website Bullmarket.com recently reported.

Investment in oil tankers and related companies is a niche market recording strong growth, which analysts are beginning to recommend. It has gained popularity as Angola is increasingly replacing Saudi Arabia as China’s biggest oil supplier.

“The longer the voyage, the more profitable it is for the oil tanker industry,” says Tony Daltorio, an analyst for Investment U. A cargo trip between Saudi Arabia and China lasts 21 days on average, while the route between Angola and China averages 33 days.

Prices charged by tankers plying the route between Japan and Saudi Arabia reached as high as US$177,000 per day several years ago.

The financial crisis caused the tankers’ dayrate to collapse to US$1,246 in September 2009.

However, tanker rates are going up again, last week rising above US$70,000 per day. According to the Bullmarket investment services company, they may soon top US$100,000, the highest in the last two years.

“More Chinese demand, combined with longer voyages, translates into good news for oil tanker operators that have resorted to using their massive ships as glorified storage facilities during the prolonged slump caused by the recession,” states the Bullmarket.com analysis.

With the 31 percent rise in Chinese oil imports in April, trips by oil tankers increased to nearly 1.13 million nautical miles, 284,000 nautical miles more than in the same month of the previous year.

“China’s demand for crude oil means oil tankers have had to traverse the globe 11 extra times in a typical month,” indicates the Bullmarket.com study.

Rikard Vabo, an analyst with Fearnley Fonds, said the dayrate for an oil tanker should hit US$100,000 in December, up 43 percent over the US$70,025 charged on 11 June.

International Energy Agency forecasts estimate a rise in Chinese oil consumption on the order of 669,000 barrels per day in 2010. They also indicate rising demand for oil tankers, as the forecasted increase implies nearly two more supertankers each week. (macauhub)