Charter costs for the biggest oil tankers plying the industry’s busiest trade route dropped the most in a week as the supply of vessels in the Middle East remained ample.
Booking rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage declined 0.5 percent today to 31.11 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed. The slide was the biggest since Feb. 7.
There are 108 tankers available in the Persian Gulf over the next 30 days, according to Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Group. That’s little changed from last week, Marex Spectron data showed. Financial markets in China, the world’s second-biggest consumer of crude, are shut this week for the Lunar New Year holiday.
“Tonnage is still well supplied, so rates will not be going anywhere,” Sy said in an e-mailed report. “As for the February supply, there are still 35 ships around.”
Daily losses for VLCCs on the benchmark voyage as determined by the exchange widened to $7,694 from $6,954 yesterday. The ships, each able to hold 2 million barrels of oil, 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, was little changed at $658.35 a metric ton today, figures compiled by Bloomberg from 25 ports 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 31.11 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, added 0.3 percent to 657, staying at the highest level since Jan. 8, according to the exchange.
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