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Short-Term Tanker Outlook Cloudy

NEW YORK ( TheStreet) -- The short-term picture for tanker stocks has grown a little muddy.

First and foremost, the widely watched fixture or cargo count -- the number of oil tanker ships booked each month to transport oil from the "Arabian Gulf" -- will possibly not reach the expected century mark for May, which could weigh on shipping rates going forward, some market watchers and investors say. ("Arabian Gulf" is tanker-industry shorthand for the Persion Gulf-Arabian Peninsula region.)

The number of fixtures in an average month is about 95, but in March and April a surge in demand for Very Large Crude Carriers pushed the count to around 105. Different shipping-industry watchers tally the number in different ways, but as of now several bearish prognosticators are calling for 95 fixtures in May.

Also, on Friday, oil futures prices continued to decline, falling to $73 a barrel as market players priced in an expected weakening in demand for crude. The conventional wisdom now seems to be that a global economic recovery will be held in check, at least to some degree, by Europe's sovereign debt crisis. Contagion also remains a concern.

The uncertainty comes after a bullish run in tanker stocks. Earlier in the year, the VLCC market roared in to life, with rates surging. Then, in early May, as the BP (BP) oil spill has expanded in severity, some market watchers said tanker rates would strengthen as a result.

Earnings reports from the tanker sector over the last two weeks have not exactly clarified matters. Teekay Corp. (TK - Get Report) on Thursday morning said it swung to a loss in the first quarter despite an increase in cargo rates from a year ago, while the company's chief, Bjorn Moller, warned that volatility would likely characterize the tanker market all through this year.

And on Monday, fan favorite Nordic American Tanker (NAT - Get Report) came through with another of its heavyweight dividend distributions, jacking its pay out by 140% to 60 cents a share.
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FRO $8.20 0.00%
NAT $11.40 3.80%
TK $5.53 -5.30%
OSG $2.30 -1.10%
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