Not a repeat of December 2018
OPEC+ has announced it will cut oil production by 0.5mbpd from January. With Iraq’s pledge to increase compliance, we now estimate 760kbpd of oil could be removed from the market, as Saudi Arabia reiterated its 400kbpd voluntary cut, compared to October 2019. However, as October was a month with strong Saudi production of 10.2mbpd, above the YTD average of 9.8mbpd, we see the actual cut more in line with 360kbpd or 30% of the cut in November last year. Hence we do not expect such a profound impact on the tanker market given high production growth in 2020 from strong tonne-mile regions such as the US (+0.85mbpd) and Brazil (+0.16mbpd). We reiterate our positive view on tanker stocks into 2020 supported by strong cash generation and pay-out ratios.
Euronav is a provider of maritime shipping and offshore services engaged primarily in the transportation and storage of crude oil. As of Apr. 4, 2017, Co. owned and operated a modern fleet of 55 vessels (including four chartered-in vessels) with an aggregate carrying capacity of approximately 13.7 million deadweight tons, or dwt, consisting of 31 very large crude carriers, one ultra large crude carrier, 21 Suezmax vessels, and two floating, storage and offloading vessels. Co. has two operating segments: the operation of crude oil tankers on the international markets (tankers) and the floating production, storage and offloading operations.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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