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Oil Tanker Winners: Teekay, Frontline

Stocks in this article: NAT TK FRO OSG SFL GMR TNP

NEW YORK ( TheStreet) -- Oil tanker stocks set a raft of new 52-week highs Monday as investors continued to pour into the sector on optimism about economic recovery and the resulting need for OPEC to hike crude production.

Those ideas were reinforced by Jeffries & Co. analyst Douglas Mavrinac, who upgraded the tanker sector of the shipping industry to buy from hold on Monday -- his first sector-wide buy rating since 2006. The upgrade follows a similar call last week by Omar Nokta, an analyst at Dahlman Rose in New York.

Over the last month, a shift in sentiment on tanker stocks appears to have overtaken the market. One hedge fund trader who had been short tanker shares as late as December gradually shifted his position until he went maximum long only a week ago. The northward trend in shares of those companies that haul crude oil across the oceans has probably also caused a fair amount of short covering: as of Dec. 15, almost 25% of Overseas Shipholding's (OSG) float was in the hands of short sellers, for example.

Even as Mavrinac made his call, spot rates for Arabian Gulf Very Large Crude Carriers, or VLCCs, shot as high as $70,000 a day Monday, almost twice as much as a week ago.

Mavrinac was a bit more discerning than his general bullish call would otherwise imply. He favors the shares of tanker companies with more than 50% of their fleets on the spot market. Those companies with fewer ships tied up in long-term charter contracts will benefit that much more from the rising rates expected by Mavrinac over the next 12 months.

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