---

Teekay Tankers (Teekay) says it expects changes in crude tanker trading patterns - driven by OPEC's recent production cuts - to support mid-sized tanker rates as global oil demand continues to grow.

In its analysis of the tanker market during the first quarter, Teekay noted: "The tanker market experienced downward pressure over the course of the first quarter due to heavy refinery maintenance, OPEC supply cuts and higher tanker fleet growth. However, changing trade patterns due to OPEC production cuts have provided support for mid-sized spot tanker rates, as a decline in Middle Eastern oil exports resulted in an increase in ton-mile intensive Atlantic Basin to Asia oil movements."

President and CEO Kevin Mackay said Teekay expected the tanker market to weaken into 2017 as a result of ongoing OPEC supply cuts and higher tanker fleet growth, but that "robust" global oil demand growth and changing trading patterns - due to supply cuts implemented by OPEC members - were expected to provide support to the mid-size tanker demand as more crude moves long-haul from the Atlantic to Asia.

Commenting on the effect of the 1.2 million-barrel-per-day (mbpd) production cuts by OPEC on the tanker market during the first quarter of 2017, Teekay said: "While OPEC cuts are negative for overall oil volumes available for transport, the mid-sized segments have found some support from increased ton-mile demand as Asian buyers look to Atlantic Basin supply to replace reduced OPEC barrels.

"For the first four months of 2017, U.S. crude exports averaged 0.4 mbpd higher year-on-year, and reached 1.0 mbpd by mid-March 2017. Overall, U.S. crude volumes are increasingly moving to Asian and European buyers, which is supportive of mid-sized tanker demand. In February 2017, China imported 0.3 mbpd of U.S. crude, overtaking Canada as the largest importer of U.S. crude."

The Bermuda-based tanker transportation firm added that the IEA's oil demand growth forecast of approximately 1.3 mbpd in 2017 would provide further support for mid-sized tanker rates during an otherwise challenging freight rate environment.

During the first four months of 2017, the world tanker fleet is estimated to have grown by 12.1 million deadweight tonnes (mdwt), or 2.2 percent. Total tanker fleet growth for 2017 is forecast to be 24.1 mdwt, or approximately 4.3 percent, which is slightly lower than 2016 but consistent with the ten-year average. Mid-size tanker fleet growth is expected to be around 10.7 mdwt, or approximately 5.6 percent, for 2017.

Overall, Teekay envisages growing crude oil supply from the Atlantic to Asia to provide some underlying support to help offset the negative fundamentals of lower OPEC supply and a period of higher fleet growth and softer tanker rates compared to 2016.

In 2018, meanwhile, Teekay expects to see a renewed market upturn driven by low new tanker ordering in the mid-sized segments, increased scrapping due to regulatory changes, and a more balanced oil market.

Key figures

In its results for the first quarter, Teekay Tankers posted a net income of $2.83 million compared to $38.98 million during the corresponding period in 2016.

Total revenue was $125.10 million - down from last year's figure of $164.95 million.