Oil-Tanker Hire Costs Fall for Eighth Session on Ship Supply

Charter costs for the biggest oil tankers hauling Middle East crude to Asia fell for an eighth session as vessels remained in ample supply in the Persian Gulf.

Booking rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage declined 0.5 percent to 31.97 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That’s the lowest level since Feb. 18, according to data compiled by Bloomberg. Each ship can hold 2 million barrels of oil.

There are 85 tankers available in the gulf over the next 30 days, six fewer than yesterday, Marex Spectron Group said in an e-mailed report. Still, the region is “well supplied” with vessels, it said, weighing on rates. The fleet’s total carrying capacity will rise 5.1 percent this year, above demand growth of 4.9 percent, according to Clarkson Plc (CKN), the biggest shipbroker.

“Rate sentiment remains negative near term due to still- high supply,” Frode Moerkedal, an analyst at Oslo-based investment bank RS Platou Markets AS, said by e-mail.

Daily losses for VLCCs on the benchmark voyage as determined by the exchange narrowed to $3,987 from $4,305 yesterday. The ships lost money on the journey for seven weeks through March 14, according to its assessments, which don’t account for owners’ efforts to improve returns by securing cargoes for return voyages or reducing speed to burn less fuel.

25 Ports

The price of fuel, or bunkers, the industry’s main expense, dropped 0.8 percent to $628.21 a metric ton today, figures compiled by Bloomberg from 25 ports showed. The decline was the biggest since March 1.

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 31.97 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 2.7 percent to 677, according to the exchange. The increase was the largest since March of last year, figures compiled by Bloomberg 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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