Bloomberg News

Oil Tankers Climb for Second Day Amid Cargo-Supply Speculation

June 14, 2013

Charter costs for the biggest tankers hauling Middle East oil to Asia rose for a second day, erasing this week’s drop, amid speculation more cargoes for loading in July will become available next week.

Hire rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage added 0.4 percent to 42.34 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That compared with 42.28 points a week ago. Each of the ships can hold 2 million barrels of crude.

Daily earnings for VLCCs on the benchmark journey also climbed for a second day and reached $16,478, up 12 percent from June 12, according to data from the exchange. The ships needed to earn about $10,780 a day to cover running costs including crew, insurance and repairs in 2011, according to the most recent assessment of industry expenses by Moore Stephens LLP, a London-based accountant.

“Surplus tonnage that remains for June dates is in a good position when charterers concentrate next week on covering their early July positions,” London-based E.A. Gibson Shipbrokers Ltd. said in an e-mailed report. “Owners were able to recover some lost ground by the end of the week.”

The exchange’s earnings assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s biggest expense. The price of fuel, or bunkers, reached an 11-month low today at $595.71 a metric ton, data compiled by Bloomberg from 25 ports showed.

Flat Rate

The Worldscale system is a way of 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 42.34 percent of the nominal Worldscale rate for the voyage.

The biggest one-day change for ships hauling crude was for 80,000-ton cargoes to the U.S. Gulf Coast from the Caribbean, down 9.8 percent to 85.91 Worldscale points. For vessels shipping refined fuels, the largest move was for tankers heading to Europe from the Gulf Coast, which added 1.6 percent to 91.07 points, bourse data showed.

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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