Can U.S. Oil Independence Become Bullish for Shippers?

NEW YORK ( TheStreet) -- This year, for the first time since 1995, the U.S. is anticipated to domestically produce more oil than is imported. As a result of domestic oil production increases, net imports of crude oil are on track to decline to the lowest level in nearly 20 years.

Lower demand for imported oil is exciting news for consumers and for domestic security. I look forward to the day when net imports drop to zero. I believe the time is coming and may arrive sooner than many predict. For the last five years in a row, the U.S. has imported less natural gas than the previous year.

Natural gas producers have recently reversed course and halted operating rigs and/or stopped rigs from coming online as a result of the energy boom shale fracking created.

The slower trajectory by U.S. natural gas producers appear to have paid off. Natural gas prices, as measured by The US Natural Gas Fund ( UNG), have bounced off a bottom and are unlikely to test the lows soon. Oil may be in a different boat, though.

A price of oil is far from historic lows, and lower U.S. demand for oil is offset by Asian demand. The United States Oil Fund ETF ( USO) is trading near $34, but if it declined at the same rate of UNG in the past four years it would trade closer to $7.

Unlike natural gas, the relatively higher price of oil provides the needed incentive for domestic producers to continue increasing production. If oil prices fall far enough that may change, but for now U.S. domestic production continues to grow.

Intuitively, investors may at first assume that lower U.S. imports would diminish demand for oil tankers and shipping companies. Shipping companies Frontline ( FRO), Overseas Shipholding Group ( OSGIQ), and Teekay Corporation ( TK) have bounced off 2012 lows recently.

Regardless of the fact the U.S. isn't importing as much oil, oil-producing nations continue their need to find markets for their oil. Oil-producing nations are shipping more oil further to reach markets that thirst for crude. As reported by the Financial Times, the number of oil ton miles (a measure of quantity of oil times the distance traveled) is growing at a relatively fast pace.

For investors, the changing shipping patterns set up new energy-related opportunities that may otherwise be overlooked. Frontline, Overseas Shipholding and Teekay all have negative trailing PEs. Teekay is estimated to almost break even for 2013, and to post a profit in 2014.

From a technical analysis perspective, Teekay is also breaking above resistance levels and made a new 52-week high last week. Frontline is oversold on the weekly chart and could reach $3 or more within a year just from halting the flow of losses. While Frontline offers the greatest percentage share appreciation potential, Teekay takes "Best In Show" today in my opinion.

At the time of publication the author had no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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