Scrapping to the Exit

June 18, 2014

Over the past few years we have seen a significant divergence in the historical correlation of VLCC scrap prices and daily hire earnings, which prompted us to take a closer look at what might be causing the differential.  We believe that one explanation can be found on the demand side of the equation, specifically the increase in US Shale oil production. Using a regression analysis, we looked to quantify the relationship of the level of US crude oil imports and VLCC earnings and found a strong correlation which indicated a positive relationship between the two variables.

To read more about our findings - download Industry Note No. 13 - Scrapping to the Exit

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