Oil Tankers Lose Money for Fourth Week as Ship Surplus Persists

The biggest oil tankers hauling Middle East crude to Asia lost money for a fourth week as ships continued to outnumber cargoes in the Persian Gulf.

Very large crude carriers are losing $941 daily on the benchmark Saudi Arabia-to-Japan voyage, figures from the London- based Baltic Exchange showed, compared with $992 yesterday. The vessels, each able to hold 2 million barrels, were earning about $16,500 a day at the year’s start.

Returns became negative again on March 28 after VLCCs lost money on the benchmark journey for seven weeks through March 14, according to the exchange. The supply of tankers available to load cargoes in the gulf remained ample, London-based E.A. Gibson Shipbrokers Ltd. said in an e-mailed report today.

“Supply continued to prove more than sufficient and rates failed to respond,” Gibson said. Demand to book VLCCs to haul crude from the gulf was “stuttering,” it said.

Charter costs for VLCCs on the route to Asia were little changed at 32.02 industry-standard Worldscale points, the exchange’s figures showed.

Earnings assessments by the exchange fail to account for owners’ efforts to improve returns by securing cargoes for return voyages or reducing speed to burn less fuel, the industry’s biggest expense. The price of fuel, or bunkers, fell 1.4 percent to $602.10 a metric ton, figures compiled by Bloomberg from 25 ports showed.

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 32.02 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 0.2 percent to 623, according to the exchange.

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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