Frontline , the world's biggest independent oil tanker shipping group, reported a 66 percent fall in fourth-quarter operating profit but said results would improve in the first quarter as demand for oil picks up.
"A faster global recovery and the projected increase in world oil consumption are likely to lead to increased transportation needs and are positive for the demand in the tanker industry," Frontline said on Friday.
"Based on the results achieved so far in the quarter, the board expects improved results for the first quarter of 2010 compared to the fourth quarter of 2009."
Frontline shares were up 1.6 percent at 0844 GMT, against a 1.3 percent rise on Oslo's benchmark index .
Earnings before interest and tax (EBIT) at the Oslo-listed shipping group dropped to $39 million, below the average forecast for $47 million in a Reuters poll.
The company said it would pay a $0.25 dividend for the quarter, unchanged from the 2008 period and at the top end of analyst forecasts.
Frontline said it should generate positive cash flow with current charter coverage if average spot rates are above $30,800 per day and $25,500 per day for Very Large Crude Carriers (VLCCs) and Suezmax tankers, respectively.
CRUDE STORAGE
Frontline said challenges for the tanker industry included crude inventories above historical averages and an oil tanker order book of about 33 percent of the VLCC fleet.
The supply of vessels in 2010 could, however, be curbed by restrictions to single hull vessels, as well as delays and cancellations of new-building orders, it said.
"We could in fact end up negative fleet growth for VLCCs in 2010," chief executive Jens Martin Jensen said at a presentation to analysts and journalists.
Last year, a price play known as a contango, or cheaper prompt oil, encouraged traders to store cargoes at sea with a view to selling them later at higher prices, reducing the number of available vessels for transport.
But that contango on the oil futures market has narrowed in recent weeks, making it less attractive to hold stocks in floating storage.
Jensen said Frontline was currently using four vessels for storage and estimated the world total at 35 vessels.
Frontline, controlled by Norwegian shipping tycoon John Fredriksen, estimated its fixed charter coverage to be 33 percent and 20 percent of the fleet in 2010 and in 2011, respectively.
"A faster global recovery and the projected increase in world oil consumption are likely to lead to increased transportation needs and are positive for the demand in the tanker industry," Frontline said on Friday.
"Based on the results achieved so far in the quarter, the board expects improved results for the first quarter of 2010 compared to the fourth quarter of 2009."
Frontline shares were up 1.6 percent at 0844 GMT, against a 1.3 percent rise on Oslo's benchmark index .
Earnings before interest and tax (EBIT) at the Oslo-listed shipping group dropped to $39 million, below the average forecast for $47 million in a Reuters poll.
The company said it would pay a $0.25 dividend for the quarter, unchanged from the 2008 period and at the top end of analyst forecasts.
Frontline said it should generate positive cash flow with current charter coverage if average spot rates are above $30,800 per day and $25,500 per day for Very Large Crude Carriers (VLCCs) and Suezmax tankers, respectively.
CRUDE STORAGE
Frontline said challenges for the tanker industry included crude inventories above historical averages and an oil tanker order book of about 33 percent of the VLCC fleet.
The supply of vessels in 2010 could, however, be curbed by restrictions to single hull vessels, as well as delays and cancellations of new-building orders, it said.
"We could in fact end up negative fleet growth for VLCCs in 2010," chief executive Jens Martin Jensen said at a presentation to analysts and journalists.
Last year, a price play known as a contango, or cheaper prompt oil, encouraged traders to store cargoes at sea with a view to selling them later at higher prices, reducing the number of available vessels for transport.
But that contango on the oil futures market has narrowed in recent weeks, making it less attractive to hold stocks in floating storage.
Jensen said Frontline was currently using four vessels for storage and estimated the world total at 35 vessels.
Frontline, controlled by Norwegian shipping tycoon John Fredriksen, estimated its fixed charter coverage to be 33 percent and 20 percent of the fleet in 2010 and in 2011, respectively.
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