Dahlman Rose Upgrades FRO and OSG

Crude Oil Declines as Reports Show OPEC Production Increase
By Mark Shenk
Nov. 26 (Bloomberg)

Crude oil fell on speculation that OPEC is increasing production to reduce record prices and keep the global economy from slowing.

The 12 members of the Organization of Petroleum Exporting Countries will probably increase output 1.1 percent to 31.6 million barrels a day this month, according to preliminary estimates by PetroLogistics Ltd. OPEC agreed in September to raise production targets for the 10 members with quotas by 1.9 percent starting Nov. 1.

``The Petrologistics numbers are showing a good-size build in OPEC output,'' said Tim Evans, an analyst with Citigroup Global Markets Inc. in New York. ``Most of the increase is from Iraq, which is fairly encouraging.''

Crude oil for January delivery fell 48 cents, or 0.5 percent, to settle at $97.70 a barrel at 2:44 p.m. on the New York Mercantile Exchange. Futures touched $99.11 today, the highest since reaching a record $99.29 on Nov. 21. Oil futures trading began in 1983. Prices are up 65 percent from a year ago.

Iraq, which last month resumed exports from Kirkuk through its northern pipeline network, will make the biggest contribution to the supply increase, raising output by 20 percent to 2.15 million barrels a day, according to PetroLogistics, which assesses supply by tracking tankers.

Iraqi Recovery

``This is the highest we've seen since the U.S. invasion in 2003 and may be a sign that the Iraqi oil industry is finally recovering,'' said Evans.

Iraqi production has yet to recover from the unrest that followed the U.S.-led invasion in March 2003. Iraq produced 2.48 million barrels a day in February 2003, the last month before the invasion. The Persian Gulf country has the world's third-biggest proved oil reserves, according to BP Plc.

Saudi Arabia is producing more than 9 million barrels a day, CNBC reported, citing unidentified people at the Saudi oil ministry. The country, which is OPEC's largest producer and the world's top oil exporter, pumped an average 8.75 million barrels a day in October, the highest since November 2006, a Bloomberg News survey showed.

Prices also fell on signs that slowing economic growth in the U.S., Europe and Japan will curb fuel consumption. Investor optimism about financial markets in the U.S., which consumes a quarter of the world's oil, fell this month to the lowest in two years after concern grew that the country is heading toward a recession, according to a UBS AG poll.

The UBS/Gallup Index of Investor Optimism dropped to 44 in November from 70 last month. The sentiment gauge declined to the lowest level since Hurricane Katrina struck the U.S. Gulf Coast and is down from a three-year high of 103 in January.

Frontline Ltd., the world's biggest supertanker operator, and Overseas Shipholding Group Inc. had their ratings raised by Dahlman Rose & Co. because of increasing OPEC shipments. Ship- hire rates on tankers sailing to Asia from the Middle East, the world's busiest market for supertankers, more than doubled since Nov. 9, according to data from the London-based Baltic Exchange. Dahlman is an investment bank that specializes in marine transport companies and related industries.

OPEC will load 24.5 million barrels a day onto tankers in the four weeks to Dec. 8, compared with 23.8 million barrels in the month ended Nov. 10, Oil Movements said on Nov. 22. It will be OPEC's 14th consecutive weekly increase and the biggest this year, according to the company, which tracks shipments.

Upcoming Meeting

The group, which produces more than 40 percent of the world's oil, is scheduled to discuss crude-oil production for the first quarter of 2008 at a meeting in Abu Dhabi on Dec. 5.

``We are primed to make another run for $100,'' said Eric Wittenauer, an analyst at A.G. Edwards & Sons Inc. in St. Louis. ``There's a good shot we will make it this time but once that occurs there is no telling what will happen.''

The dollar dropped to a record low against the euro earlier today on concern U.S. credit-market losses may prompt the Federal Reserve to keep reducing interest rates. The U.S. currency recovered against the euro later in the session.

``On one hand there's growing evidence that demand will drop,'' Wittenauer said. ``Economic concerns are being reflected in a number of markets. At the same time, we are seeing weakness in the dollar, which tends to push commodity prices higher.''

Persian Gulf Tanker Rates May Climb

Persian Gulf Tanker Rates May Climb as OPEC Boosts Crude Output
By Alaric Nightingale
Sept. 12 (Bloomberg

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may rise as OPEC boosts output by 500,000 barrels a day, increasing the number of cargoes.

``This is positive for tanker owners,'' London-based shipbroker Galbraith's Ltd. said in an e-mailed note today, adding that extra cargoes could ``creep'' into the market in October. OPEC members have ``historically'' pre-empted the official start of output increases, which is due to be November.

Shipping lines including Frontline Ltd., the world's biggest operator of very large crude carriers, or VLCCs, need more exports from Organization of Petroleum Exporting Countries to reverse losses from day-to-day rentals and eliminate a glut of vessels competing for cargoes.

Hyundai Merchant Marine Co., a South Korean shipping line, hired the VLCC BW Noto at a rate of 50 Worldscale points, according to a report today by Paris-based shipbroker Barry Rogliano Salles.

That's 3 percent below the London-based Baltic Exchange's benchmark assessment of 51.63 points for shipments to Asia, which has fallen for the past 11 days.

BW Noto is likely to cost less than the benchmark because it's fitted with one hull separating its cargo from the ocean. The exchange's rate also reflects rentals of two-hulled tankers that cut the risk of an oil spill and normally cost more to hire.

Bunker Prices

At 51.63 Worldscale points, owners of double hulled VLCCs, can earn about $18,620 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest VLCC operator, said Aug. 22 it needs $30,000 a day to break even on each of its supertankers.

There are probably about 16 outstanding bookings to be made in September and 104 in October, based on average monthly loadings from Middle East ports this year, according to a report today from Barry Rogliano Salles. One hundred and eight VLCCs will be available for hire in the region by Oct. 12.

Bookings for VLCCs sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.

Persian Gulf Tanker Rates May Rise, Capital Shipbrokers Says
By Alaric Nightingale
Sept. 11 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may rise as demand for the raw material increases before winter in the northern hemisphere, according to Capital Shipbrokers LP.

``Heating oil production reduces inventory,'' Tim Coffin, head of research for the London-based company said in an e-mailed note published today. Refinery demand will lead to an ``autumn bounce'' in the cost of renting ships, he said.

Rental rates have declined 22 percent since Aug. 24 because of a glut of tankers.

China International United Petroleum & Chemical Corp., or Unipec, hired the tanker La Madrina at 55 Worldscale points, a measure of the cost of renting ships, according to a report today from Athens-based Optima Shipbrokers.

The rate is 6.5 percent above the London-based Baltic Exchange's benchmark assessment of 51.66 points for a similar voyage. La Madrina is fitted with two steel hulls separating its cargo from the ocean and the exchange benchmark includes single- hull tankers that are cheaper to rent.

At 51.66 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $18,653 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Bookings for VLCCs sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP.

Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.

Persian Gulf Oil-Tanker Rates May Rise

Persian Gulf Oil-Tanker Rates May Rise on Weather, OPEC Cargoes
By Alaric Nightingale
Aug. 17 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may rise today as the Organization of Petroleum Exporting Countries pumps more oil and two storms threaten to disrupt shipping.

OPEC, supplier of 40 percent of the world's crude, has increased shipments by 1 million barrels a day since July ``without saying anything,'' Jennifer Gordon, a New York-based trading analyst at Deutsche Bank Securities said in an e-mailed note yesterday. A supertyphoon approaching Taiwan and a hurricane off the Lesser Antilles in the Caribbean may delay vessels.

``Weather is always a factor for market movement,'' Nikos Varvaropoulos, a tanker broker for Athens-based Optima Shipbrokers, said in an e-mailed note today.

The benchmark rental rate for shipments to Asia, used to settle freight contracts between owners and oil companies, climbed 1.2 percent to 50.44 Worldscale points yesterday, its biggest one-day gain in six weeks. The rate was previously at its lowest since October 2003.

At 50.44 Worldscale points, owners of double-hulled VLCCs can earn about $19,191 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

Frontline Ltd., the world's biggest VLCC operator, said May 30 it needs $29,500 a day to break even on each of its supertankers.

Bookings for supertankers sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. Shipments to the U.S. and Caribbean, the second-biggest market, account for 14 percent of demand for supertankers.

OPEC Oil Exports increase 260,000 bpd

OPEC Oil Exports in 4 Wks to Sep 1 Seen +260,000 B/D
by Spencer Swartz
Aug 16, 2007

LONDON - Seaborne OPEC oil shipments are expected to jump by 260,000 barrels a day in the four weeks to Sept. 1 from the previous one-month period, with nearly all of those exports headed to the U.S. and Europe, U.K. tanker tracker Oil Movements said Thursday.

The rise, the second in as many weeks, comes as some Organization of Petroleum Exporting Countries push more barrels into the market to informally respond to increasing calls for the group to raise production, said Roy Mason, head of the consultancy.

"I think perhaps the Saudis are starting to move some oil west on the expectation that more oil will be needed," Mason said, although he cautioned that he didn't expect OPEC shipments to continue ramping up in the weeks ahead.

"We're at the end of the season as far as long haul sailings go" because of the end of summer and on the onset of autumn when energy demand tails off, Mason said.

OPEC shipments are seen rising to a total of 24.08 million barrels a day versus 23.82 million barrels a day in the four weeks to Aug. 4, he said.

Mason also revised down last week's data, with OPEC shipments now seen as having risen by a net 230,000 barrels a day in the four weeks to Aug. 25 versus the previous one-month period from an original expectation for a net rise of 360,000 barrels a day.

Sailings from key OPEC Middle East countries are forecast to increase by 330,000 barrels a day to 17.19 million barrels a day in the four weeks to Sept. 1 relative to the previous one-month period.

OPEC is currently producing between 700,000 to 800,000 barrels a day less than at this time last year, Mason said. A few weeks ago, OPEC had even more barrels out of the market year-on-year - about 1.2 million barrels a day year-on-year, Mason said.

OPEC is scheduled to meet in Vienna on Sept. 11 and indications from some OPEC ministers and officials are that the 12-nation producer group is likely to keep its production targets unchanged and not increase output, as the International Energy Agency and other outfits have been urging.

Oil Movements forecasts OPEC exports based on spot and term chartering of crude from OPEC member countries. Production from OPEC's 12 members meets around 40% of the 86 million barrels a day consumed globally.

Persian Gulf Tanker Rates Little Changed

Persian Gulf Tanker Rates Little Changed as Owners Fight Losses
By Alaric Nightingale
Aug. 10 (Bloomberg)

The cost of shipping Middle East crude to Asia, the world's busiest market for supertankers, may be little changed as owners continue to resist leasing out their carriers at unprofitable levels.

``The shipping market is cyclical and owners are awaiting an upturn,'' Nikos Varvaropoulos, a tanker broker for Optima Shipbrokers in Athens, said today in an e-mailed note.

Falling freight rates, fueled by OPEC's crude-oil export cuts last year and growth in the world fleet of tankers, have pushed rates down to levels where owners are starting to refuse to transport the cargoes. Owners of more-modern ships may also be declining cargoes because they have to include finance costs when calculating their break-even figures, Varvaropoulos said.

GS Galtex Corp., South Korea's second-biggest oil refiner, hired the La Prudencia at a rate of 54 Worldscale points, according to a report today from Oslo-based shipbrokers PF Bassoe A/S. That's 6.8 percent above the London-based Baltic Exchange's benchmark assessment of 50.54 points for similar voyages.

La Prudencia is fitted with two hulls to cut the risk of an oil spill in an accident. The exchange assessment also takes into account single-hull tanker-rental rates, which are normally lower.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

At 50.54 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, with a carrying capacity of 270,000 tons can earn about $21,105 a day on a 38-day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices. Frontline Ltd., the world's biggest VLCC operator, said May 30 it needs $29,500 to break even on each of its supertankers. Frontline has to pay financing costs for its carriers.

Bookings of supertankers sailing from the Middle East to Asia account for 47 percent of global demand for the carriers, according to New York-based McQuilling Brokerage Partners LLP. U.S. and Caribbean cargoes account for 14 percent and are the world's second-busiest market for supertankers.

Supertanker Rates May Fall This Quarter

Supertanker Rates May Fall This Quarter on OPEC Supply Squeeze
By Alaric Nightingale
July 9 (Bloomberg)

The cost of hiring supertankers on the world's busiest shipping lanes may slump this quarter as OPEC, supplier of 40 percent of the world's crude, works to reduce a glut of crude in the U.S.

Daily earnings for carriers able to haul 2 million-barrel cargoes of Middle East crude on the main supertanker route to Asia will drop 42 percent to $47,500 a day, according to the median estimate of seven analysts polled by Bloomberg News July 5 and 6. They were about $82,000 in the same quarter last year.

Crude stockpiles in the U.S., the world's biggest oil- consumer, have soared to a nine-year high. The glut may prompt the Organization of Petroleum Exporting Countries to curb shipments, swelling the number of supertankers available to transport loads and hurting earnings at owners such as Frontline Ltd., according to Finn Engelsen of Laurentzen & Stemoco A/S.

``As far as OPEC are concerned, there's only one choice and that's to work for a reduction of stocks in the U.S.,'' said Engelsen, managing director at the Oslo-based shipping consultant, who correctly predicted tanker-rental rates would halve at the end of last year when other analysts forecast smaller declines and even gains.

U.S. refineries account for about a quarter of demand for the world's largest crude carriers, according to data from New York-based McQuilling Brokerage Services LLP. When shipments to the U.S. decline, it frees up tankers for other routes, reducing hire rates globally.

Below-normal refinery processing, caused by fires and extended maintenance programs, left U.S. oil companies with about 300,000 barrels a day of crude they didn't need in the second quarter, according to Ole-Rikard Hammer, senior analyst at Oslo-based PF Bassoe AS, who has tracked tanker markets for 20 years.

`Extraordinary Situation'

``The problem is the extraordinary U.S. refinery situation,'' said Hammer. ``Inventories are high and they don't need to bring in more crude for the moment.''

OPEC began trimming production in October last year, pushing average tanker-rental rates down to 39 percent less than their year-earlier levels. U.S. crude-oil inventories climbed to 354 million barrels in the second quarter, the most since 1998, according to the Energy Department in Washington.

A growing global fleet of tankers is stoking declines in rates. So far this year, the number of vessels has expanded by about 4.5 percent to 495, according to data from London-based shipbroker Galbraith's Ltd.

At the same time, OPEC's cutbacks have helped to trim the volume of crude carried by tankers by 5.2 percent to 466 million barrels, according to estimates from Halifax, England-based consultant Oil Movements Ltd.

``That's simply because of OPEC cut production,'' said Oil Movements founder Roy Mason. ``OPEC produces less oil, so there are fewer shipments.''

Frontline Shares Rise Most in a Month (FRO)

Frontline Shares Rise Most in a Month on Expected OPEC Supply
By Grant Smith
July 4 (Bloomberg)

Shares of Frontline Ltd., the world's biggest oil-tanker company by carrying capacity, rose the most in more than a month on expectations of increased OPEC supply and as futures contracts indicated freight rates will rally.

The Organization of Petroleum Exporting Countries will probably accede to calls for increased output in the second half of the year as countries in the northern hemisphere seek to bolster stockpiles in preparation for winter fuel demand, according to Anders Kirkhorn Rosenlund, an analyst at ABG Sundal Collier ASA.

``We think OPEC will increase production,'' Rosenlund, who has a ``hold'' recommendation on Frontline shares, said in a telephone interview from Oslo. The share gain was aided by trading in tanker futures contracts, which ``suggest freight rates will more than double'' over the next five months, Rosenlund said.

Futures contracts on the benchmark route between the Persian Gulf and Japan show an increase of 119.2 percent between the front and fifth months, according to data provided by Oslo-based derivatives broker Imarex NOS ASA.

Shares of Hamilton, Bermuda-based Frontline closed up 15.5 kroner, or 5.7 percent, at 287 kroner in Oslo, their biggest gain since May 31. The shares have advanced 5 percent this week, valuing the company at 21.5 billion kroner ($3.69 billion).

Frontline Is Upgraded (FRO)

Frontline Is Upgraded by Fondsfinans on OPEC Outlook
By Alaric Nightingale
June 19 (Bloomberg)

Shares of Frontline Ltd., the world's biggest oil-tanker company by carrying capacity, were upgraded by Norwegian stockbroker Fondsfinans ASA on expectations OPEC will pump more oil, boosting shipping demand.

Analysts led by Arne Roenning in Oslo raised their recommendation on Frontline's shares to ``buy'' from ``sell'' in a note to clients today.

They also increased their share-price target for the Hamilton, Bermuda-based shipping line to 350 Norwegian kroner ($58.12) from 250 kroner. The stock rose 4 kroner, or 1.5 percent, to 276 kroner in Oslo.

``We expect OPEC to open up the tap in the second half to keep crude prices at sustainable levels,'' the analysts wrote. ``The effect will be rising tanker demand and freight rates.''

The Organization of Petroleum Exporting Countries will have to produce an extra 1.7 million barrels a day next year to keep global supply and demand balanced, Fondsfinans said, citing estimates by Energy Market Consultants.

``Last time we saw an increase of this magnitude was in 2004,'' the analysts said. ``The effect was record-high tanker rates'' of $250,000 a day for the largest class of supertankers known as very large crude carriers, or VLCCs.

FRO