Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Stock Markets Failing to Give Another AI Mega-trend Buying Opportunity - 6th Jun 20
Is the Stock Bulls' Cup Half-Full or Half-Empty? - 6th Jun 20
Is America Headed for a Post-Apocalyptic Currency Collapse? - 6th Jun 20
Potential Highs and Lows For Gold In 2020 - 5th Jun 20
Tying Gold Miners and USD Signals for What Comes Next - 5th Jun 20
Rigged Markets - Central Bank Hypnosis - 5th Jun 20
Gold’s role in the Greater Depression of 2020 - 5th Jun 20
UK Coronavirus Catastrophe Trend Analysis Video - 5th Jun 20
Why Land Rover Discovery Sport SAT NAV is Crap, Use Google Maps Instead - 5th Jun 20
Stock Market Election Year Cycles – What to Expect? - 4th Jun 20
Why Solar Stocks Are Rallying Against All Odds - 4th Jun 20
East Asia Will Be a Post-Pandemic Success - 4th Jun 20
Comparing Bitcoin to Other Market Sectors – Risk vs. Value - 4th Jun 20
Covid, Debt and Precious Metals - 3rd Jun 20
Gold-Silver Ratio And Correlation - 3rd Jun 20
The Corona Riots Begin, US Covid-19 Catastrophe Trend Analysis - 3rd Jun 20 -
Stock Market Short-term Top? - 3rd Jun 20
Deflation: Why the "Japanification" of the U.S. Looms Large - 3rd Jun 20
US Stock Market Sets Up Technical Patterns – Pay Attention - 3rd Jun 20
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Crude Oil Price Tanks but Oil Tankers are Filling Up and Raking it In

Commodities / Crude Oil Jan 07, 2016 - 10:06 AM GMT

By: Sol_Palha

Commodities

"A man, when he wishes, is the master of his fate." ~ Jose Ferrer

While oil continues to drop, there is one sector connected to the oil market that is doing rather well. It is the oil tanker sector, and while oil is trading at 11-year lows, many stocks in this sector are already posting double digits gains over the past 12 months. This sector looks appealing both from the Contrarian and Mass psychology perspective for the following reasons.


  1. The masses are ignoring it; in fact, one could state that most of them dislike this sector. The best time to get into a sector is when the masses despise or are blatantly ignoring a sector.

  2. The average Joe assumes that if oil drops, the tanker sector will also suffer. While this was true during the first part of the oil market collapse, the two markets have parted ways.

Take a look at the following chart and it shows that most of the stocks in this sector have performed rather well over the past few months. We purposely included one laggard to illustrate the point that not all stocks are created equal. One should focus on the leaders during the first part of the breakout stage. When the rally is mature, one can divert attention to the laggards as they will eventually catch up the pack.

NAT, FRO, TNK, SFL and NAP


Factors that bode well for this sector

  1. Time Charter Rates for very large crude carriers (VLCC) have soared over the past 12 months, in fact from a low of roughly 34,000 per day; they have surged to almost $50,000 per day.

Suezmax spot price.jpg

  1. Oil producers all over the world continue to pump oil at record rates. In fact, Russia set a new record last year despite ultra-low oil prices. It pumped 534.081 million metric tons in 2015, 40% more than it did in 2014. Iran's oil will soon hit the markets, and this could put even more pressure on the already weak market. However, this is good business for oil tanker stocks, as a lot of this oil will have to be put in storage. The fact that rates have surged by almost 45% from a year ago indicate that the industry now has some pricing power, and it looks like this trend could continue going forward. Rates are still below their 2008 peak, but they are a long way of their 2012-2013 lows.

  2. A group of stocks in this sector have broken out, indicating that this is not an isolated event. Out of the five stocks, we listed, 4 are showing healthy gains and the strongest stock in the sector as of today is Nordic American Tankers (NAT). Two other strong players in the sector are Frontline (FRO) and Ship Finance International (SFL).

Game Plan

The sector is not being followed actively, in fact, the crowd is ignoring it, and this is usually the best time for the astute investor to plan an entry. Mass psychology states that you should be happy when the crowd is wary and wary when they are happy. Investing in the energy sector has been an exercise in futility in 2015 for the most part, but there appears to be a bright spot. . We would wait for the oil tanker sector to pullback before committing any new money to this sector. The current market pullback should provide investors with lovely entry points in some of the top performing stocks in this sector.

"Let us act on what we have, since we have not what we wish." ~ Cardinal J. Newman

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2016 Copyright Sol Palha- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules