Bloomberg News

Oil-Tanker Earnings Rise as Seasonal Demand Shrinks Ship Glut

November 07, 2011

Nov. 4 (Bloomberg) -- Earnings for the largest crude carriers hauling 2 million barrels of Persian Gulf oil to Asia turned positive as rising demand shrank a glut of ships.

Very large crude carriers on the benchmark Saudi Arabia-to- Japan route are earning $554 a day, after making a loss of $623 yesterday, according to data from the Baltic Exchange in London.

Refineries are likely to hire more vessels over the next few weeks to meet winter demand, as inventories have been depleted, which may spur daily earnings to rise, Herman Hildan, an analyst at Oslo-based RS Platou Markets AS, said in an e- mailed note today.

“We may finish the most active week this year today, which has brought the four-week Middle East Gulf supply down to less than 70 from 110 a month ago,” Hildan said in the report.

Owners can boost returns by reducing a ship’s speed on the return journey after its cargo has been unloaded, saving on fuel costs. The exchange’s earnings estimates don’t reflect speed alterations. The price of ship fuel, or bunkers, advanced 31 percent this year to $667.01 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed.

Hire costs for very large crude carriers on the benchmark voyage increased 0.2 percent, according to the bourse. The points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

The Baltic Dirty Tanker Index, an overall measure of shipping crude that includes vessels smaller than VLCCs, declined 0.5 percent to 766, according to the exchange.

--Editors: Sharon Lindores, Claudia Carpenter

To contact the reporter on this story: Rob Sheridan in London at

To contact the editor responsible for this story: Alaric Nightingale at

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