The number of oil tankers hauling Middle East crude to Asia has risen to the highest level since December on increased Chinese demand for cargoes, according to Wells Fargo Securities LLC.
Chinese demand for crude spurred an increase in the capacity of crude tankers sailing to Asia, rising 500,000 barrels daily last week, climbing to 13.2 million barrels a day, the highest since December, Wells Fargo said in an e-mailed note today.
So-called spot, or single-journey, rates for very large crude carriers hauling 2 million barrels of Middle East crude along the benchmark route to Asia have jumped 78 percent to $41,093 a day in the past five days, according to the London- based Baltic Exchange. Forward freight agreements used to bet on, or hedge, future shipping costs on this route may fall to $21,000 a day during the second quarter, Wells Fargo said.
“We continue to expect the tanker market to retrench, with rates spending significant portions of the second quarter, third quarter closer to break-even levels,” Wells Fargo said.
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