Euronav (NYSE: EURN) reported a loss that was slightly lower than expected, despite the ongoing weakness in oil tanker rates. The tanker company expects demand and rates to rise toward the end of 2019.
Euronav reported a net loss of $0.18 per share. The forecast from Wall Street analysts had been for the company to report a $0.19 per share loss.
Revenue of $169.3 million was 62 percent lower than a year earlier. Time charter rates for the largest of its tankers were down 22 percent from a year ago as demand for oil shipping remains tepid across most parts of the globe.
Chief Executive Officer Hugo De Stoop said the tanker company anticipated freight rates would be weak for the second half of the year due to heavy refinery maintenance reducing oil shipping demand, cuts from members of the Organization of Petroleum Exporting Countries (OPEC) and deliveries of new ships into the market.
The third quarter is showing no signs of a recovery in oil shipping demand and the company is “disappointed not to have seen a recovery in the rates yet,” De Stoop said.
Euronav noted that most of the major energy research agencies have cut their growth forecasts for oil demand to 1.2 million barrels per day from 1.4 million barrels per day. On top of lower demand, OPEC’s decision to cut production 1.2 million barrels per day through the first quarter of 2020 provides a challenging background for the wider tanker market.
But Euronav said refineries that have been offline for maintenance will restart and the growth in U.S. crude export volumes to 3.9 million barrels per day set the stage for a recovery.
“We remain constructive on freight rate recovery in the fourth quarter, based on continued U.S. crude export volume growth and IMO 2020 preparation and its related induced reductions to vessel supply,” De Stoop said.
During the quarter, Euronav delivered its oldest tanker to a new owner, which will convert the ship into floating storage. Euronav also announced its participation in the Poseidon Principles, which will tie bank financing for shipping to efforts to reduce carbon dioxide emissions.