Bloomberg News

Oil-Tanker Returns Slide for Third Day as Ship Surplus Persists

February 27, 2012

Returns for the largest oil tankers hauling Middle East crude to Asia fell for a third session as a surplus of ships persisted and fuel prices rose.

Daily income for very large crude carriers on the benchmark Saudi Arabia-to-Japan route slid 1.6 percent to $13,929, according to figures from the London-based Baltic Exchange today. That pared the gain from the start of the year to 13 percent. Each VLCC can hold 2 million barrels of oil.

The number of ships available to load cargoes in the Persian Gulf over the next four weeks was unchanged, according to Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Group. Fuel (BUNKI380) prices, vessel owners’ main expense, are at the highest level since at least October 2008, figures collected by Bloomberg from 25 ports worldwide show.

“Despite more action at the end of the week, there were also more ships added to the 4-week list, hence the unchanged count,” Sy said in a report. There are 22 tankers available until March 10 and 37 more until March 20, it showed.

The exchange’s assessments of shipowners’ earnings don’t reflect speed cuts aimed at reducing fuel costs. Owners can curb those expenses, boosting returns, by slowing ships on return journeys after unloading cargoes. Fuel prices rose for an eighth session in a row today to $728.34 a metric ton.

Hire costs for VLCCs on the benchmark voyage gained 0.5 percent to 53.41 industry-standard Worldscale points, according to the exchange. That was the biggest advance since Feb. 16, the data showed.

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, declined 0.3 percent to 796, the lowest level since Feb. 14.

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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