Bloomberg News

Oil-Tanker Hire Rates Fall for Second Day as Bookings Dwindle

January 26, 2012

Jan. 26 (Bloomberg) -- Hire costs for supertankers hauling Middle East oil to Asia fell for a second day as bookings weakened amid a holiday in China.

Rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan route slid 3.4 percent to 62.61 industry- standard Worldscale points, according to the London-based Baltic Exchange.

Rents climbed 31 percent from the start of the year through Jan. 20, the last session before Chinese markets closed for this week’s Lunar New Year holiday. The country is the world’s second-biggest importer of crude after the U.S. and the largest energy consumer.

“With China still celebrating the New Year, the pace could still be below normal levels,” Frode Morkedal, an analyst at RS Platou Markets AS, wrote in an e-mailed report. The number of VLCCs hired remained “very low,” he wrote.

The global fleet of supertankers will expand 8.4 percent this year to 189.7 million deadweight tons, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. That’s seven times more than the International Energy Agency’s estimate for a 1.2 percent gain in global oil demand to 90 million barrels a day.

Fourth Drop

Daily earnings on the benchmark route fell 7.6 percent to $28,461, the fourth straight decline, according to the exchange. Returns have retreated 12 percent this week, its data show. Tankers were losing money on the voyage for almost eight weeks last year through Oct. 19.

The exchange’s assessments don’t account for owners cutting speed to reduce fuel costs, their biggest expense. The price of ship fuel, or bunkers, was little changed at $700.09 a metric ton, according to data compiled by Bloomberg from 25 ports worldwide. That compares with an average of $637.38 last year.

Worldscale 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, a broader measure of oil- shipping costs that includes vessels smaller than VLCCs, slid 0.7 percent to 829.

--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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