Bunker demand in Europe has steadily fallen in recent weeks as lower product flows along typical routes capped shipping activity and led to reduced demand for marine transport fuel, European fuel oil traders said Wednesday.

"Bunker demand has slowed in the last two weeks -- all routes on the market are depressed," a trader said. "Even dry cargoes are really low; there's not much moving."

Mediterranean bunker fuel oil traders reported lower demand for bunker fuel oil from cruise ships in the region despite the startup of the summer cruise season in mid-April.

"Cruise ships have less calls [inquiries] for bunkers," one Piraeus-based trader said, adding that there was about 5-10% less demand from cruise ships in Piraeus in May on a year-on-year basis. Istanbul bunker suppliers reported a 30% drop of seasonal demand for bunker fuel compared with a similar period last year.

As the daily earnings for the clean tankers in the West of Suez market fell over this month, shipowners have opted to keep their tankers half-filled with bunkers, shipping sources said.

A few shipbrokers said the shipowners will not be burning more bunkers, as the rates were volatile.

"The shipowners will not fill their tanks given that the rates are so volatile, and the market is so depressed," a London-based shipbroker said.

"The daily earnings of the shipowners on the Cross-Mediterranean and the Black Sea-Med route, basis 30,000 mt, have reached almost close to zero now, where they are only earning $1,000 per day," the shipbroker said.

Activity has also been fairly subdued in the dirty tanker market, where freight rates on many of the major routes have been mired at low levels due to long tonnage lists comfortably absorbing the numbers of cargoes in the market.

This is well illustrated by Aframaxes in the Mediterranean region, where freight rates are currently being pegged in the low w80s on the Black Sea-Med and Cross-Med routes, having reached highs of w285 in January.

A variety of factors have conspired to reduce the number of cargoes currently seen in the market. The ongoing uncertainty surrounding the Libyan oil fields and ports has prevented a steady flow of cargoes from the country, while disruption to the Kirkuk-Ceyhan crude export pipeline has meant that the only cargoes currently coming from the Turkish port are of Azeri Light.

Market sources say there are about 2 million barrels of Kurdish crude ready to be sold from Ceyhan, but shipping sources believe that none of this has been fixed to be transported on tankers so far. This, along with low rates in the Baltic and North Sea areas, has left a large number of vessels available in the Mediterranean.