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The shipping industry will scrap the largest number of oil tankers this year in over a half-decade, according to Reuters. The pace of scrapping comes after years of overcapacity and low rates, with the OPEC cuts also hurting demand for shipping.
“The tanker markets are definitely in a trough at the moment, with one of the worst years in a decade in terms of freight rates and returns,” Ralph Leszczynski, head of research at ship broker Banchero Costa, told Reuters. The poor market conditions will last until next year, but the removal of excess capacity will help.
Investors more bearish on oil…
For nearly two consecutive months, hedge funds and other money managers have cut their bullish positions on oil futures, a sign of waning optimism about the oil price rally. The positions by major investors in WTI futures is now at its most bearish in seven months. “It’s hard to get really excited in the short-term on the oil price, given that U.S. production is surging, hitting record-highs every week,” Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC, said in a Bloomberginterview. “Hedge funds got really bullish early on in the year and it was sort of a surprise” that Saudi Arabia and Russia have suddenly decide that they need to boost output.