JP Morgan has trimmed expectations for 2019 tanker rates, while revising its outlook on some of the sector's players.
In a Wednesday morning note, analyst Noah Parquette rolled back his VLCC rate forecast from $25,500 per day to $23,000 and MR tanker rate forecast from $14,000 per day to $12,000, downgraded Scorpio Tankers and Tsakos Energy Navigation from overweight to neutral and upgraded Euronav to overweight.
"[W]e are now incrementally more bearish on rates in 2019 as crude inventories have built and OPEC production cuts have been re-implemented," he wrote. "Nevertheless, we continue to see a recovery in 2020 and view select stocks in our coverage list as attractive."
Tanker rates shot up in the fourth quarter of 2018, rising as high as $35,772 per day for VLCCs according to the Baltic Exchange. In early January, they had dropped to $16,988 per day and further to $13,531 on Wednesday.
Still, analysts called the rates "healthy."
Parquette attributed the late year jump to "heavier-than-usual" refinery maintenance. He cited inventory growth plus Opec production cuts as reasons for scaling back rate projections.
For tanker stocks, Parquette said the recent selloff in Euronav stock made it attractive.
Scorpio Tankers was downgraded over dilution and leverage concerns. Tsakos, Parquette wrote, was downgraded given expectations for the rest of the sector.
