Bloomberg News

Oil-Tanker Rates Gain as Increase in Charters May Curb Supply

January 03, 2013

The cost of shipping Middle East oil to Asia, the tanker industry’s busiest trade route, rose amid speculation stronger bookings may curb vessel supply.

Charter rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage added 0.4 percent to 42.83 Worldscale points, data from the London-based Baltic Exchange showed today. The ships’ daily earnings fell for a fifth session as the price of marine fuel climbed the most in almost four months.

As many as 10 Persian Gulf cargoes are available for loading in the Jan. 15-20 period, Odysseas Valatsas, chartering manager for Dynacom Tankers Management Ltd., Greece’s second- largest VLCC operator, said by e-mail today. Most VLCCs are available during the month’s final 10 days, likely leading to an “uptick in activity near-term,” Oslo-based investment bank Arctic Securities ASA said.

“Prompt cargoes make charterers nervous,” Valatsas said. “You might see a few vessels on the list, but that doesn’t mean that all the vessels are suitable for all the cargoes. Today there is a lot of activity.”

The combined carrying capacity of the world’s VLCCs will expand 5.3 percent this year, below demand growth of 6.3 percent, according to figures in a December report from Clarkson Research Services Ltd., a unit of the largest global shipbroker. Each of the tankers can hold 2 million barrels of crude.

Lower Speeds

VLCCs’ daily earnings on the benchmark route slid 2.3 percent to $16,136, according to the exchange. Its assessments don’t reflect speed cuts aimed at curbing use of ship fuel, or bunkers, the industry’s biggest expense.

The price of fuel added 1.2 percent to $619.96 a metric ton, according to figures compiled by Bloomberg from 25 ports. The gain was the biggest since Sept. 4.

The Worldscale system is a method for pricing oil cargoes on thousands of trade routes. Each individual voyage’s flat rate, expressed in dollars a ton, is set once a year. Today’s level means hire costs on the benchmark route are 42.83 percent of the nominal Worldscale rate for that voyage.

The Baltic Dirty Tanker Index, a broader measure of oil- shipping costs that includes vessels smaller than VLCCs, lost 1 percent to 689, according to the exchange.

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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