Broker cautious about 2008 onwardsNews // February 11, 2008
Broker Offshore Shipbrokers Ltd (OSL) has issued an analysis of the market in the North Sea that is best described as cautious.
"Looking ahead at 2008 it would be fair to say that most owners are confident of another good year, though perhaps not quite as good as 2007," said OSL in its latest monthly report. "With another circa 65 uncommitted vessels most likely destined for the North Sea over the coming year it will be interesting to see how well these are absorbed into the market and what effects we will see."
"One positive factor is the continued busy summer construction season but with signs of a global economic slowdown on the horizon and more challenging financial markets this may begin to effect operators ability to raise capital for future projects," said OSL.
"Though high oil prices peaking in January in excess of US$100 per barrel will have boosted confidence, it has since backed off to nearer US$88 per barrel with worries of a looming US recession and associated reduction in user consumption seen as a factor."
OSL noted that BP has recently given its view that the oil price will now remain at US$60-$90 "for the next few years," and there is no doubt that a supply fears will be lessened further with BP’s refinery in Whiting, Indiana, expected be a full crude capacity in the first half of this year, and its Texas City refinery expected to have available capacity of 400,000 barrels a day by the end of March.
As OSL also noted, BP’s Thunderhorse project is also expected to start production by the end of this year, further improving supply.
"What will this mean for shipowners?," asked OSL. "Probably very little during 2008, but the clouds are certainly forming on the horizon with regards to longer term demand."
"With owners now facing increased vessel purchasing, financing and crewing costs and a sizeable increase in the worldwide fleet expected given the current orderbook, the long term prediction can only be that the market is going to become somewhat more challenging over the next few years," OSL concluded.