Bloomberg News

Oil-Tanker Rates Gain for Fourth Session as Ship Supply Shrinks

March 09, 2012

Charter rates to hire the largest crude tankers to ship Middle East oil to Asia rose for a fourth session as a vessel surplus shrank.

Hire costs for very large crude carriers, each able to transport 2 million barrels, on the benchmark Saudi Arabia-to- Japan voyage gained 0.8 percent to 55.93 industry-standard Worldscale points today, according to the London-based Baltic Exchange. That’s the longest winning streak since Feb. 20, the data show.

The number of ships available to load in the Persian Gulf until the end of March decreased by four to 38, while demand should keep freight rates “steady,” according to Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Group. As many as 17 cargoes may be available until the end of the month, he said in an e-mailed report today.

Daily income for VLCCs on the route gained 3.2 percent to $17,980, according to the exchange. Returns have gained 50 percent since March 5 and are up 46 percent from the beginning of the year, the data show.

The assessments don’t reflect speed cuts aimed at reducing fuel costs, vessel owners’ largest expense. Owners can boost returns by slowing ships on return journeys after unloading of cargoes.

The price of ship fuel, or bunkers, gained 0.4 percent to $732.73 a metric ton, the highest level since at least October 2008, data compiled by Bloomberg from 25 ports worldwide show.

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, increased 0.7 percent to 818, the highest since Jan. 30, the bourse data show.

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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