Bloomberg News

Tanker Surplus in Persian Gulf Swells, According to Survey

November 30, 2011

(Updates Baltic Exchange rates starting in sixth paragraph.)

Nov. 29 (Bloomberg) -- A glut of supertankers competing to load 2 million-barrel cargoes of crude oil in the Persian Gulf expanded, a survey showed.

There are 17 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 survey of five shipbrokers and one owner today. That’s an increase of 4 percentage points from last week.

“The supply of vessels is just too abundant,” Anders Karlsen, an Oslo-based analyst at Nordea Markets, said by e- mail. Still, demand is “high,” with about 65 cargoes for loading in the first half of December, he said.

Tanker bookings have averaged 117 a month this year, according to figures from London-based shipbroker Galbraith’s Ltd. The number of the ships available in the gulf over the next four weeks rose by 10 to 91, Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Group, said by e- mail.

The current vessel surplus is equal to the 12-month average and 14 points below the high for the period, Bloomberg data show.

Daily returns for VLCCs on the industry’s benchmark Saudi Arabia-to-Japan voyage declined for a fifth session today, falling 4.1 percent to $14,286, the lowest level since Nov. 14, according to the London-based Baltic Exchange. Earnings reached an eight-month high of $27,271 on Nov. 22.

Lower Speeds

The exchange’s earnings assessments don’t account for owners cutting speeds to save fuel. The price of ship fuel, or bunkers, rose 29 percent this year to $655.02 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed.

Hire costs on the benchmark route fell 0.5 percent to 59.13 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 rise 5.3 percent this year to 148.2 million deadweight tons as the fleet expands 8 percent to 173 million tons, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker.

The Baltic Dirty Tanker Index, a measure of shipping crude that includes vessels smaller than VLCCs, rose 0.9 percent to 787, the exchange’s data show.

--Editors: Dan Weeks, Claudia Carpenter.

To contact the reporters on this story: Isaac Arnsdorf in London at iarnsdorf@bloomberg.net; Alaric Nightingale in London at anightingal1@bloomberg.net

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


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