Bloomberg News

Tankers Surplus in Persian Gulf at Lowest Since June

November 18, 2011

(Corrects headline of story published on Nov. 15 to say that the surplus of vessels is at its lowest since June.)

Nov. 15 (Bloomberg) -- The number of available supertankers competing to load 2 million-barrel shipments of crude at Persian Gulf ports shrank as oil demand strengthened, spurring an increase in the number of vessels hired.

There are 9 percent more very large crude carriers, or VLCCs, available for hire over the next 30 days than there are likely cargoes, according to the median estimate in a Bloomberg News survey of five shipbrokers and two owners today. That’s the lowest since June 7, and 3 percentage points less than last week, previous data show.

Oil companies and traders hired 53 vessels to collect cargoes from Middle East ports last week, more than the five- year average of 35 bookings, according to a weekly report from Norwegian investment bank Pareto Securities AS e-mailed yesterday. The number of bookings last week increased 33 percent from the previous week, according to Pareto.

“We expect the market to keep up this sustained strength for another couple of weeks, as the supply of vessels seems tight,” Oslo-based Pareto analyst Martin Korsvold said today by phone.

Increased demand for crude from refineries in China returning from scheduled maintenance has boosted the number of ships booked to haul oil cargoes to Asia from the Persian Gulf, Korsvold said.

Benchmark Voyage

Hire costs on the benchmark voyage increased 3.1 percent to 62.28 in industry-standard Worldscale points today, according to the bourse. That’s the highest charter rate since March 22, exchange data show. 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.

Daily returns for VLCCs on the industry’s benchmark Saudi Arabia-to-Japan route advanced for a sixth consecutive session to $14,463, according to the London-based Baltic Exchange today. That’s the highest return since June 23.

The Front Chief, a VLCC, was booked to load 270,000 metric tons on Nov. 23, heading to China from the Persian Gulf at 65 Worldscale points, which equates to $23,500 a day on Pareto’s slow-steaming assumptions, said Korsvold.

The exchange doesn’t take speed cuts, known as slow- steaming, into account when calculating daily returns. The price of ship fuel, or bunkers, declined 0.4 percent to $686.03 a ton, data compiled by Bloomberg from 25 ports worldwide showed today. Bunker fuel prices are up 35 percent from the start of the year.

The Baltic Dirty Tanker Index, an overall measure of shipping crude that includes vessels smaller than VLCCs, advanced 0.4 percent to 785 today, the exchange said.

--Editor: John Deane

To contact the reporter on this story: Rob Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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