Crude Oil Tanker Rates Slump

John Robertson

PortfolioDirect

The Baltic Exchange maritime market price indices are often used as indicators of commodity market conditions although they are mostly of uncertain value. Movements in an index may reflect changed commodity shipment rates, from which inferences about usage can be drawn, but they can also be due to changes in shipping capacity following the launch of new vessels, for example, or the scrapping of existing ships. The Baltic dirty tanker index, shown in the chart, does warrant a mention, however, having fallen dramatically since mid-June. This is the index related directly to the shipment of crude oil. Tankers can also be used as storage capacity so some care must be taken in drawing inferences from charter prices about near term movements in usage. Nonetheless, the index change over the past week is consistent with deteriorating crude oil market balances and the lower crude prices witnessed over the last two weeks.


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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...

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