What happened
Shares of oil tanker stockNordic American Tankers(NYSE: NAT) fell as much as 21.3% in trading today after the company gave the market an update on operations. Shares closed the day down 11.4%.
So what
In a press release before the market opened, Nordic American Tankers' management said that they will announce first-quarter 2022 results before the market opens on May 31, 2022. And for the second quarter, they expect time charter equivalent rates of about $20,000 per day with about 70% of capacity booked.
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The rate is high for the tanker industry, but low utilization isn't a great sign in an environment that should be strong for the industry. To put today's price announcement in context, in the fourth quarter of 2021 the company reported time charter equivalent rates of $10,100 per day.
Now what
Shares of Nordic American Tankers are up about 70% from their lows before Russia invaded Ukraine, which was a big driver of recent demand. But that surge in demand may be short-lived, and investors may be seeing that the pop will fade in time if day rates don't remain elevated. Long-term, there's a significant risk that revenue per day is at or near its peak and will decline from here, which isn't great for a company that's been losing money consistently in the oil tanker market.
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Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
