Frontline Says Crude Oil Supertankers Still `Vulnerable' as Fleet Expands

Frontline Ltd., the world’s biggest operator of supertankers, said the shipping market is still “vulnerable” after almost five months of unprofitable rates.

The company, based in Hamilton, Bermuda, reported third- quarter net income of $12.26 million, or 16 cents a share, compared with a loss of $5.61 million, or 7 cents, a year earlier. Revenue rose 7.8 percent to $251.1 million, Frontline said in a statement today.

Shipowners cut speeds and idled vessels this year as spot rates plunged from as much as $88,345 a day in January to $25,849 now, according to data from the Baltic Exchange. Frontline needs $31,300 a day to break even on its supertankers. While the Northern Hemisphere’s winter should spur demand for oil, shipping will remain “vulnerable as new tonnage enters the market,” Frontline said, referring to the biggest-ever shipbuilding program.

“They are not bullish, they are fairly realistic,” said Petter Narvestad, an analyst at Fondsfinans ASA in Oslo who recommends selling Frontline shares. “They are facing a tougher market balance than we’ve seen for some time.”

Shares of Frontline rose 0.9 kroner, or 5 percent, to 170.80 kroner as of 9 a.m. in Oslo trading.

To contact the reporter on this story: Alaric Nightingale in London at anightingal1@bloomberg.net;

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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