OPEC’s call for a reduction in oil output and Russian President Dmitry Medvedev’s eager willingness to cooperate might be bullish for oil prices. Whether OPEC can successfully stave off the decline in oil prices is being debated here. The real concern is for the ultimate loser being the oil transportation tanker ships as the combination of demand destruction and reduced oil output means less oil to export.
Some may say the group has been badly beaten by sellers year-to-date and while this may be true, so has just about everything else in this deleveraged market. On a short-term basis, the Transportation-Shipping Industry index, which comprises oil tankers, dry shipping, and miscellaneous other cargo transporters, is overbought. The group rallied +20.47% between December 4th and 10th and sold off -5.57% Thursday. During this same period, i.e. December 4th-10th, a basket of oil tanker transportation stocks (Arlington Tankers (ATB); General Maritime (GMR); Nordic American Tanker (NAT); Shipping Finance Int’l Ltd. (SFL); Teekay Corp (TK); Teekay Offshore (TOO); and Knightbridge Tankers (VLCCF)) returned an average +15.52% and declined an average -4.86% Thursday.
While Thursday’s weakness may have been taken for granted due to the stock market’s negative performance, these stocks should be monitored, especially during market rallies. How long the oil production cuts will last cannot be determined yet, but this fundamental may not be fully factored in their stock prices and these stocks may be ideal short candidates on strong.
Source: http://seekingalpha.com/article/110460-seven-oil-tanker-stocks-that-may-get-beaten-up-by-opec
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