The tanker market has been slow to recover, but recent improvements have B Riley analyst Liam Burke bullish.

In a note published on Thursday, Burke said he rated all four tanker owners under his coverage — International Seaways, KNOT Offshore Partners, Nordic American Tankers and Scorpio Tankers — as buys ahead of third-quarter earnings likely to be uninspiring.

"With Opec+ production cuts and Covid-19-related global economic weakness, spot tanker earnings for the first half of 2021 hit 20-year lows but the industry's expectations were set for the market to pick up in the second half of 2021," Burke wrote.

"Slowing the anticipated second-half recovery was the more contagious Delta variant of Covid-19 that pushed some parts of the world to impose new restrictions."

The Baltic Dirty Tanker Index was middling for the entirety of the third quarter, rising slightly from 592 points on 1 July to 626 points on 30 September.

Since, the index has rallied to 755, a high not seen since mid-March.

The Baltic Clean Tanker Index followed a similar pattern, climbing 51 points to 496 during the quarter before a rally kicked off on 13 October which saw the index rise to 571 on Thursday.

Burke said crude tankers should see improvement thanks to longer-term fundamentals such as the return of oil demand and an expectation that scrapping will increase.

He attributed the jump for clean tankers to rising Opec+ production, the end of refinery maintenance season and growing oil consumption.

His price target for International Seaways is $35, KNOT Offshore $22, Nordic American Tankers $5 and Scorpio Tankers $30.

Burke wrote that he was not expecting much from either companies' third-quarter results, but all should benefit from the improving market heading into the fourth quarter and beyond.

International Seaways, he said, would benefit by adding Diamond S Shipping's fleet of product tankers and suezmaxes, which should provide "additional stability" to revenue.

KNOT's refinancing of five ships should help it maintain distributable cash, while Burke said Nordic American Tankers has an improving balance sheet allowing it to continue its fleet renewal.

For Scorpio Tankers, he said higher natural gas prices should translate to higher demand for fuel oil and more travel should boost demand for jet fuel while inventories are low.