Bloomberg News

Oil-Tanker Rates Gain Most This Year as Vessel Bookings Increase

January 30, 2013

Hire costs for the largest oil tankers rose the most this year on stronger bookings of ships to haul cargoes of Middle East crude to Asia, the industry’s busiest trade route.

Charter rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage increased 2 percent to 31.06 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That was the first gain since Jan. 11.

The supply of tankers available in the Middle East over the next 30 days shrank by nine ships to 98, according to data from Marex Spectron Group. Only 13 vessels are available for February’s first 10 days, said Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron.

“Activity finally came to life with a net of nine fixtures surfacing,” Sy said. “It should be just as busy today, but with tonnage still sufficiently supplied, rates are probably not yet ready to rally, but it should at least stop sliding.”

Daily losses for the tankers on the benchmark voyage narrowed to $5,189 from $6,409 yesterday, exchange data showed. VLCCs, each able to hold 2 million barrels of crude, earned money in only four sessions in the third quarter on the journey.

The exchange’s assessments fail to account for owners’ efforts to improve returns by securing cargoes for a voyage’s return leg or reducing speed to burn less fuel, known as slow- steaming. The price of fuel, or bunkers, the industry’s main expense, fell 0.9 percent, the most since Nov. 5, to $628.04 a metric ton, figures compiled by Bloomberg from 25 ports showed.

Demand Estimate

The combined carrying capacity of the world VLCC fleet will expand 5.3 percent this year, below demand growth of 5.9 percent, Clarkson data showed.

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 31.06 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, increased 0.6 percent to 636, 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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