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Vet67to82 (< 20)

Shipping 'n crude supply for 9/10/2008

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September 09, 2008 – Comments (2) | RELATED TICKERS: DHT , SEA , FRO

   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)     

       

  

  

2 Comments – Post Your Own

#1) On September 09, 2008 at 2:40 PM, investmentcafes (80.10) wrote:

Hi good comments...I Actually Rated "SEA" as a buy just now.I Believe the BDI/Shippers have been sold short recntly..last few weeks.Because Slowing global economy,and worried about Dividends being taxed higher if obama dems win...that's put alot of pressure adding to the " Global slowdown scenario".But at some point..and i believe soon,the Risk vs Reward of the dividends and Stronger Dollar,meaning less imports to usa of some goods but more Exports due to that Stronger Dollar will Eqaulize the " Global Trade Scenario".Thus Rates for BDI will begin finding a bottom and as of this writing oil ministers are contemplating an oil production cut..thats got the " Tanker Segment affected ..less oil to be shipped scenario adding fuel to the downside.I believe they're going to keep output at Current levels..that will Frim the Tankers..soon Grains from Usa are going to be shipped..and the missippi will allow shipping..due to Storms flooding New orleans last week" Hurricane".Also the downside of oil prices will allow for more consumers/Buisnesses to have more money.and oops Drive more..thus creating abid for more Gas.

Also Coal..So far China is keeping theirs but stock piles are down so they too will import soon for winter or risk having not enough for power/Heat through winter.yes I Agree Biodiesels are affecting also the shipping proces as you've mentioned as is the efforts to use more Ethanol here in USA,thus supposedly less oil/nat gas needed.It's Definately alot of Factors affecting the "BDI".

Sorry to be so " Long" winded  hehehe....

I think DWT,SB,TK,Too,SFL,TBSI,EXM.and maybe use SEA as a hedge/Short or use to "BUY" All...They're Excellent companies with good dividends and over long term will make a Good Return vs the Markets.Happy Trails.

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#2) On September 09, 2008 at 5:10 PM, Vet67to82 (< 20) wrote:

Thanks for the additional great points

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