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, or VLCCs, on the benchmark Saudi Arabia-to-Japan journey rose 3.6 percent to a five-week high of 58.10 Worldscale points, according to the London-based Baltic Exchange. Yesterday’s 6 percent gain was the biggest in two months, the data show. Each VLCC 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 20 percent to $22,275, the highest level since Nov. 23, and has almost doubled in three sessions, according to the exchange. Its estimates don’t reflect speed changes. Owners can curb fuel costs, boosting returns, by reducing a ship’s pace on a return journey after unloading of cargo.
The price of ship fuel, or bunkers, declined 0.6 percent to $695.36 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed today.
The Baltic Dirty Tanker Index, a broader measure of oil-shipping costs that includes vessels smaller than VLCCs, increased 2.1 percent to 822.
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