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Oil-Tanker Glut Shrinks on Chinese Demand

A glut of supertankers competing to load cargoes of Persian Gulf oil shrank to a 14-month low on Chinese crude purchases and persistent tensions over a possible closing of the Strait of Hormuz.

There are 5 percent more ships available for hire over the next 30 days than there are likely cargoes, the smallest excess since Nov. 2, 2010, according to a Bloomberg News survey of seven shipbrokers and owners today. Contracts used to bet on the cost of shipping oil in February were little changed after yesterday advancing the most since pricing began on Sept. 1, according to broker Marex Spectron Group Ltd.

Demand for crude before China’s weeklong Lunar New Year holidays starting Jan. 23 may be helping to lift charter rates, Jens Martin Jensen, Singapore-based chief executive officer of oil-tanker company Frontline Ltd. (FRO)’s management unit, said by e- mail today. Iran’s threat to block the strait may spur traders to stockpile crude, said Sverre Bjorn Svenning, an analyst at Fearnley Consultants AS.

“Buyers are looking to secure oil cargoes in anticipation of a possible full-scale conflict in the Hormuz,” Oslo-based Svenning said by phone today. Fearnley Consultants is a unit of Norwegian shipbroking group Astrup Fearnley. The waterway is a chokepoint for shipments of crude from the gulf.

Charter rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan journey yesterday rose 6 percent, the most in two months, to 56.10 Worldscale points, according to the London-based Baltic Exchange. Each of the ships can haul 2 million barrels of oil.

The points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

Daily income for VLCCs on the benchmark route jumped 32 percent to this year’s high of $18,492 after surging 24 percent on Jan. 13, according to the exchange.

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