Oil tanker stocks boom as Russia-Ukraine conflict requires longer routes

[MongiIG]

The new normal for energy consumption appears to have shifted due to Russia-Ukraine conflict, with oil tankers enjoying the benefits of longer trade routes

Source: Bloomberg

 

Shares Commodities Oil tanker Petroleum Russo-Ukrainian War Teekay

 Joshua Mahony | Senior Market Analyst, London | Publication date: Friday 17 February 2023 

Russian export restrictions drive tanker rates higher

Oil tanker stocks have enjoyed a year to remember, with many names within the sector doubling over the course of the past 12-months. Much of this upside comes amid a massive readjustment in how Europe obtains energy since the Russia-Ukraine war began. That breakdown in relations between Europe and Russia means that Europe has been seeking to fulfil their energy needs from further abroad, with crude and LNG imports largely coming by sea.

Source: Clarksons

That provides greater confidence that we could see the current resurgence extend despite the gains already seen throughout the sector. With longer journeys being undertaken, we have seen a marked improvement in the daily rates for many ships, although the 2022 surge did ease in the fourth quarter. With China expected to provide yet another source of increased demand thanks to its reopening, we are seeing tanker rates turn upwards once again of late.

Source: Bloomberg

Technical Analysis

There are a whole host of oil tanker stocks to choose from, but the charts below highlights some of the prominent options for investors.

Scorpio Tankers

Scorpio has almost tripled over the past year, with the stock pushing sharply higher over the past three-weeks in particular. From a momentum perspective, short-term traders are looking at a very consistent performer of late. From an investment standpoint, the potential for another turn higher in rates could help support the stock, although it is worthwhile noting the potential for trendline resistance to come into play. The ability to push through that trendline will be key in maintaining the current near-term uptrend. Interestingly, there have been signs that Scorpio have been seen servicing ports in Russia unlike many others in the space.

Source: ProRealTime

Teekay Tankers

Teekay have enjoyed a 244% rise over the course of the past year, with the stock rising into a fresh seven-year high this week. It is interesting to note that the recent pullback during December lasted 5-weeks, tallying up with the June 2022 retracement. For bulls there is hope that a continued uptick in tanker rates will drive another extended surge like the one we have seen back in the second half of last year. To the downside, a break below the $26.41 level would be required to negate this bullish trend.

Source: ProRealTime

International Seaways

International Seaways is approaching the November peak of $46.78 this week, coming off the back of a retracement throughout late Q4. A push through resistance looks likely here, with the uptrend seen throughout the past year expected to continue. A break below $33.05 would be needed to break this wider uptrend.

Source: ProRealTime