Oil-Tanker Rates End Streak of Declines as Ship Surplus Shrinks

2013-05-23

Charter rates for the largest oil tankers hauling Middle East crude to Asia rose after five sessions of declines as a surplus of the vessels shrank.

Hire costs for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage added 0.9 percent to 36.06 industry-standard Worldscale points, data from the London-based Baltic Exchange showed today. That was the biggest gain since May 9. Each of the ships can hold 2 million barrels of crude.

The number of VLCCs available to load cargoes in the Persian Gulf over the next four weeks fell by 11 to 77, Marex Spectron Group said today in an e-mailed report. The world fleet’s carrying capacity will expand 5.1 percent this year, near demand growth of 5 percent, according to data from Clarkson Plc, the world’s largest shipbroker.

“Although the overhang of tonnage is less than seen in recent months, there is still sufficient tonnage around to cover charterers’ needs and desires,” the consulting unit of Oslo-based shipping-services and investment-banking company Astrup Fearnley said in an e-mailed report yesterday.

Daily returns for VLCCs on the benchmark route fell 37 percent to $3,547, exchange data showed. The ships were earning almost $11,000 a day at the end of last week. The bourse’s assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s biggest expense.

The Worldscale system is a way of pricing oil cargoes on thousands of trade routes. Each individual voyage’s flat rate, expressed in dollars a metric ton, is set once a year. Today’s level means hire costs on the benchmark route are 36.06 percent of the nominal Worldscale rate for the voyage.

The biggest one-day change for crude tankers was for VLCCs heading to the U.S. Gulf Coast from the Middle East, which fell 2.8 percent to 21.43 Worldscale points, exchange data show. For ships moving refined fuels, the largest move was for deliveries to northwest Europe from ports in the Baltic Sea, which climbed 6.2 percent to 171.79 points.

Source from : Bloomberg

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