More and more analysts and shipping market professionals are expecting a decline in tanker freight rates, both in the last quarter of this year and in the first one of 2007, with the benchmark Gulf-to-Japan VLCC route’s rate already falling to a four-month low last week. Shipping companies themselves highlight the issue, with Jeffrey Pribor, the financial manager of listed firm Genmar, owned by Peter Georgiopoulos, saying that tankers’ rates are expected to go down in the year’s last three months, mainly due to the reduced demand for oil by the US. This is attributed to the increase in oil reserves at US refineries. In the week that ended September 22, US commercial oil reserves grew by 2.6 million barrels to 151.3 million barrels, which is the highest of the last seven years. The following week US crude oil reserves came to 328.1 million barrels, increased by 3.3 million barrels, signifying a 6.7 percent annual rise. The increased reserves are explained by the lack of major hurricanes, compared with the same period in 2005. At the same time certain refineries have planned maintenance works in September and October, which has limited the US capacity in receiving crude oil for refining. According to Genmar, freight rates could partially rise toward the end of the year, mainly due to seasonal demand, thus avoiding reaching a year’s low. Nevertheless, no one can be certain about the balance between supply and demand in 2007. Recent reports suggest that next year the volume of new tankers to enter the market will increase by 20 percent, reaching a three-decade peak. The global fleet’s shipping capacity is expected to rise by 32 million dwt in 2007, without any offsetting factors such as ship scrapping working in favor of freight rates. Market sources suggest that ships of no more than 8 million tons capacity will be withdrawn next year. This growth of the global fleet is the consequence of the high number of orders made to shipyards three or four years ago, when the market enjoyed a rising course due to the increased demand for oil. In 2004 alone, shipowners invested about $23 billion for the construction of new ships. The first wave of new ship deliveries will be next year. Increased demand will naturally put pressure on freight rates, to the extent that demand will not be able to absorb the new vessels fully. The forecasts about the consolidation of the global economy’s growth rate in 2007 mean that the increase in oil demand will not be significant, although many experts dispute this assessment.