Shipping 'n crude supply for 9/10/2008
I'm expecting that 5 plus million barrel draw down that I was epecting last week.
Shipping has slowed down to maximize the spot market day rate earnings versus the bunker fuel the ships burn getting from point A to B. The slow downs have caused port delays in loading and offloading, including ballasting for return trips.
The back to back storms/hurricanes are causing well/pipeline/ terminal shutins/shutdowns. Prudence dictates the crude carriers aren't going to enter the Gulf in a hurricane and risk a catastrophy. The majors are seeking crude from the US Strategic Petroleum Reserve (SPR) and the requests are being granted ...
The crude released from the SPR will have to be replaced. The unknown quesion is ... will crude inventories, measuring 33 BILLION dollars (at crude = $110/barrel) continue to decline and to what DOLLAR level .... 30 Billion ? 25 Billion ? 20 Billion ?
The USA has 300 million Americans on a planet with a 5.7 BILLION persons.
The gross misunderstanding is equating the falloff in USA demand with the falloff in GLOBAL demand. The USA uses more gasoline while the European Union (EU) uses more biodeisel. Two completely different types of fuel AND the EU recently complained the USA export of biodiesel to the EU was hurting EU refineries. SOOOO, that tells you the USA is importing crude and exporting refined product that we wind up paying for here.
The shipping companies are still getting day rates bigtime above previous years rates and averages. The slpw down is conserving bunker fuel, extending the voyages, and that's less wear and tear on the engines lowering maintenance costs. Benefit: shipping companies like FRO, DHT, SFL. If you don't like the risk of owning individual companies, but like the dividend yield ... there's a new shipping ETF: Claymore Etf Trust 2 (SEA)