The low oil price could turn out to be a very positive development for Torm, says the carrier in an email to ShippingWatch. Both because the carrier can pay less to operate its own ships due to lower fuel costs, and because the oil trade will grow.
"A lower price on oil leads to lower fuel oil prices, which means lower bunker costs for us. If the market stays the same this could increase our earnings. In the past few months the product tanker market has improved while bunker costs have gone down, and this has been positive for product tanker carriers," says the company.
Torm is a listed carrier and thus declines to comment specifically on what the declining oil price could mean for the company in 2015, but the carrier is also wary not to rejoice too soon.
"From a macro-economic perspective, lower energy prices are good news for the global economy, which should theoretically become stronger, and this is positive for product tanker. But it's still too soon to say anything about how positive it will be and what other effects it could have, as this depends on how long the oil price stays at the current level as well as future expectations for the oil price," says Torm.
Torm owns a fleet of 43 product tankers, and the carrier has an additional seven product tankers on charter and another 40 product tankers under commercial management or in pool.
Norden and Hafnia Management also positive
Fellow carrier Norden is also pleased with the declining oil price, especially in light of the growing oil trade caused by the low price. This development came as a surprise, Lars Bagge Cristensen, Executive Vice President and Head of Tanker Department at Norden, told ShippingWatch Wednesday.
"This past spring we saw a remarkable downturn in the oil market, where the global economic growth stopped and had a negative impact on the oil trade. But the declining oil price has accelerated the oil trade again and this, most importantly, means that there is a greatly increased need for oil transport," he said, adding that the decreasing oil price has quickly rubbed off on the markets.
And not just in one tanker segment but all of them, including the medium range product tankers that Norden operates as well as crude oil tankers Aframax, Supramax and VLCCs.
"The entire accordion has been stretched out and is resounding throughout all the tanker segments. All markets are in demand and this strengthens our faith that the current rebound is based on a solid foundation."
Hafnia Management, which operates 65 tanker vessels, voiced a similar opinion last week, with CEO Anders Engholm expecting "a great finish" to 2014. He also partially attributed this development to the low oil price, though he also pointed to poor weather conditions as helping make the rates soar. The major VLCCs have reached average earnings of USD 64,400 this week.