The global oil product inventories have to be drawn down in order to see demand for product tankers pick up, according to Henry Curra, global head of research at Braemar ACM Shipbroking.
While the outlook for crude oil globally is strong for this year, refining demand has slowed because of the oversupply of refined products that has built up over the past two years, Curra said at a Connecticut Maritime Association conference, as cited by Platts.
"In 2016, refinery runs barely moved at all," the manager said.
Global crude demand is seen rising 1.4 million bpd before bottoming out in 2020, Curra said.
Meanwhile, oil product stockpiles have been abundant and have slowed refining demand, which has translated into lower demand for product tankers, he noted.
"Over the last few months, we've been in a process of drawing down those stocks and as we draw down those stocks they compete with imports and that's given a slightly bearish tinge to that product carrier market," Curra said, as quoted by Platts.
According to international shipping association BIMCO, following a very strong 2015, "fortune faded" - as expected - for both the crude oil tanker segment and the product tanker market in 2016. In both tanker segments, the fleet grew by 6 percent last year, the association has estimated.
Looking ahead, "in coming years the end-consumption of oil will need to catch up - and bloated oil stocks must be drawn on - before the market can be rebalanced," BIMCO said in January in a report on the shipping industry last year and expectations for this year. According to BIMCO, the shipping industry in 2017 "will see another year of die-hard competition, which now includes tankers".
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More