Challenging market conditions plagued by the oversupply of vessels have pushed tanker owner and operator Tanker Investments Ltd (TIL) further into the red in the third quarter of the year.

Namely, TIL reported a net loss of $9.4 million for Q3, widening its loss from the corresponding quarter a year earlier, which stood at $2.9 million.

For the nine-month period, net loss was $12 million, a major downturn when compared to the net income of $28.5 million for the corresponding period in 2016.

Generated cash flow from vessel operations was $5.6 million in the third quarter of 2017, compared to $7.6 million in the previous quarter.

“The third quarter was particularly challenging for the tanker market,” said William Hung, Tanker

“The combination of OPEC cutbacks and oversupply of vessels outweighed strong oil demand which impacted rates during the seasonally weak third quarter. As we move through the fourth quarter, we expect tanker rates to increase as seasonal weather delays will dampen effective vessel supply along with a slowdown in vessel deliveries. Looking ahead to 2018, we expect a recovery will continue as the bulk of the orderbook will have delivered in 2017 and, with oil demand continuing to grow, we expect to see an increase in fleet utilisation due to demand for longerhaul voyages.”

The results have been released ahead of the special shareholders’ meeting scheduled for November 17 when TIL’s shareholders are going to decide on the proposed merger with Teekay Tankers.

During Q3 total revenues decreased to $21.4 million from $26.6 million in the same quarter last year due to lower spot tanker rates earned across the fleet. During the nine months ended September 30, 2017, total revenues decreased to $80.9 million from $120.2 million in 2016.

The global tanker fleet grew by 24.5 million deadweight tons (mdwt), or 4.4 per cent, in the first nine months of 2017.

The tanker fleet growth is expected to moderate in the coming months, as the peak of newbuilding deliveries has passed and as the pace of scrapping is expected to pick up.

A total of 7.1 mdwt of tankers was scrapped in the first nine months of 2017, a significant increase from 2.5 mdwt of scrapping for the entire year of 2016.

For 2017 as a whole, TIL forecasts tanker fleet growth of just over 5 percent, down from approximately 6 percent in 2016. Lower fleet growth is expected in 2018 and 2019 as the orderbook continues to roll-off and as tanker scrapping increases, with additional upside from potential further cancellations of newbuilding contracts due to the lack of available refund guarantees.