What happened

Shares of DHT Holdings (DHT 1.81%) closed 6.8% higher on Friday after the Bermuda-based oil tanker owner-operator reported its fiscal third-quarter earnings results Thursday evening.

Surprisingly, DHT's gains came despite the fact that it lost $0.15 per share (Wall Street had anticipated a loss of only $0.10 per share), and despite the fact that its $48.2 million in revenue for the quarter likewise fell short of Wall Street estimates. 

Tanker moving through the seas

"Darn the GAAP losses, full speed ahead!" shout DHT investors. Image source: Getty Images.

So what

DHT's news was as objectively bad as it was bad relative to analyst expectations. Sales for the quarter declined 12% year over year, while losses ballooned nearly four times in size from last year's $0.04 per-share Q3 loss. So, what explains investors' optimism?

It's impossible to say for sure, but if you ask me, I suspect it's the Baltic Dirty Tanker Index that's to "blame" for DHT's higher share price.

Now what

As a crude oil tanker, DHT's rates (and revenues, and profits) are largely determined by the prices other shippers of "dirty" oil are able to charge -- rates reflected on the Baltic Dirty Tanker Index, or BDTI. According to data from Investing.com, rates on the BDTI went pretty much perpendicular in October -- shooting up from "793" on the first of the month to "1,157" by Halloween.

As long as this trend holds, I suspect investors will pay little attention to how poorly DHT has fared in the past -- and keep their spyglasses glued to the chart, hoping it forecasts how DHT will fare in the future.