Crude oil prices
Brent crude oil prices ranged from $35.3 per barrel to $38 per barrel for the week ending on March 4, 2016. The prices fell almost 40% compared to the same period last year.
Crude oil (DBO) prices impact crude oil demand. In turn, this impacts freight rates and bunker fuel prices.
Oil demand and tanker rates
Lower oil prices encourage countries to import larger quantities of cheap oil to store for future use. This increases the crude tanker demand. This has a positive impact on tanker rates. Higher freight rates benefit the crude tanker industry.
Bunker fuel prices
Bunker fuel prices, the biggest cost to run a ship, are correlated to crude oil prices. For the week from February 29, 2016, to March 4, 2016, the average bunker fuel price ranged from $216 per ton to $222 per ton. Bunker fuel prices were almost 50% lower compared to same period last year.
For major ports, the bunker prices at Rotterdam were $145–$149 per ton. At Fujairah Port, the bunker prices were $157–$160 per ton.
Lower bunker prices reduce operating costs and increase profits for companies like Frontline (FRO), Teekay Tankers (TNK), Tsakos Energy Navigation (TNP), Nordic American Tankers (NAT), DHT Holdings (DHT), General Maritime (GNRT), Navios Maritime Midstream Partners (NAP), and Euronav (EURN). Investors who are interested in broader exposure to the industrials sector can invest in the SPDR Dow Jones Industrial Average ETF (DIA).