Bloomberg News

Tanker Surplus in Persian Gulf Expands, According to Survey

November 23, 2011

(Updates Baltic Exchange rates starting in sixth paragraph.)

Nov. 22 (Bloomberg) -- A glut of supertankers competing to load 2 million-barrel cargoes of oil at Persian Gulf ports expanded, a survey showed.

There are 13 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 one owner today. The surplus increased 4 percentage points from last week.

Oil companies and traders hired 45 vessels to load at Mideast ports last week, down from 51 in the prior seven-day period, Norwegian investment bank Pareto Securities AS said yesterday. That’s more than the five-year average of 36, it said. Tankers available in the gulf over the next four weeks rose by 17 to 86, Kevin Sy, a Singapore-based freight- derivatives broker at Marex Spectron Group, said by e-mail.

“The peace shouldn’t last for another day as, among other things, there will be some rush to fix U.S.-bound cargoes before” the country’s Thanksgiving holiday on Nov. 24, Sy said. “The imminent resumption of activity should keep rates firm.”

The current vessel surplus is 3 percentage points less than the 12-month average and 15 points below the high for the period, Bloomberg data show.

$27,271 a Day

Daily returns for VLCCs on the industry’s benchmark Saudi Arabia-to-Japan route advanced for an 11th consecutive session to $27,271, according to the London-based Baltic Exchange. That’s the highest level since March 14, its data show. The ships were earning $332 a day at the start of November.

The exchange doesn’t take speed cuts into account when calculating returns. The price of ship fuel, or bunkers, advanced 30 percent from the start of the year to $663.27 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed.

Hire costs on the benchmark voyage increased 1.6 percent to 68.46 Worldscale points, according to the exchange. 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.

Global demand to transport oil on VLCCs will expand 5.2 percent this year to 144.9 million deadweight tons, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. That’s below its estimate for 8 percent growth in the fleet to 173 million tons.

The Baltic Dirty Tanker Index, an overall measure of shipping crude that includes vessels smaller than VLCCs, was unchanged at 786, the exchange said.

--Editors: Dan Weeks, 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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