Strong oil demand boosts OMI’s 2nd-quarter profits

Strong oil demand boosts OMI’s 2nd-quarter profits    OMI Corp., the Stamford, Conn.-based tanker shipping company that recently dropped its takeover bid for Stelmar Shipping, reported on Tuesday sharp increases in its revenues and profits for the second quarter and half-year ended June 30 as the oil tanker market enjoyed strong oil cargo volumes.
   Net income for the second quarter rose 19 percent to $25.4 million, from $25.4 million in the same quarter of last year. Revenue in the latest quarter increased to $97.7 million, from $77.9 million a year earlier.
   For the six months ended June 30, net income soared 69 percent to $86.7 million, from $51.2 million in the first half of 2003. Revenue in the latest six-month period rose 39 percent to $224.1 million, from $161.6 million.
   World oil demand in the second quarter, though lower than the preceding quarter due to seasonality, was substantially higher than the level prevailing in the same period of last year, OMI reported.
   OMI said the strong tanker-shipping market continued in the second quarter. It added that the average time-charter equivalent rate for “Suezmax” tankers in the West Africa-to-U.S. trade, though lower than the peak preceding quarter level, was “substantially higher compared to the rate in the same quarter of last year, and the highest level for this period since at least 1990.”
   “The crude tanker market strength has been the result of higher world oil demand due to improving world economic activity especially in the U.S., China and South East Asia, a tight U.S. natural gas market, and the decline of the U.S. dollar,” OMI said.
   It also cited the switch of combined carrier tonnage into the strong dry bulk sector, more long-haul Middle East OPEC oil replacing the loss of Iraqi oil production through a pipeline to the Mediterranean and the persistent shortfall of oil production in Venezuela.
   The tanker-shipping operator reported that the average OPEC oil production in the second quarter totaled about 28.1 million barrels per day, an average increase of 1.5 million when compared to the same period last year. OPEC oil producers last February announced a reduction to their oil production quota, but the oil cartel decided last month to increase its quota by 2 million barrels per day, up to 25.5 million barrels per day (excluding Iraq), beginning July 1, and to implement an additional 500,000 barrels per day in August. “The OPEC quota increase was the result of tight oil markets and very high oil prices, relatively low oil inventories, and the expected strong world oil demand growth in the second half of the year,” OMI said.