Oil-Tanker Surplus Expands Amid Slowing Demand to Hire Vessels

A surplus of oil tankers in the Persian Gulf, the world’s biggest crude-loading region, rose from the lowest level since January amid weaker demand to charter ships.

There are 17 percent more very large crude carriers available for hire over the next 30 days than probable cargoes, the median in a Bloomberg survey of four shipbrokers and an owner showed today. That’s up from last week’s 15 percent, the smallest excess since Jan. 8, according to previous surveys. Each tanker can hold 2 million barrels of cargo.

Hire costs for VLCCs on the benchmark Saudi Arabia-to-Japan trade route jumped 16 percent last week, this year’s biggest increase, according to the Baltic Exchange in London. They were little changed for a second session today. The number of VLCCs available in the gulf over the next four weeks rose by seven to 70, Marex Spectron Group said in a report.

“VLCC rates took a breather yesterday after surging last week,” Erik Nikolai Stavseth, an analyst at Oslo-based investment bank Arctic Securities ASA, said in an e-mailed report today. “Rates are likely to remain steady near-term.”

Charter rates on the benchmark voyage rose 0.1 percent to 40 industry-standard Worldscale points, the exchange’s figures showed. They last fell on April 26. The ships’ daily earnings gained 4 percent to $12,263, according to the bourse, whose assessments don’t reflect speed cuts by vessels aimed at curbing use of fuel, the industry’s main expense.

Flat Rate

The Worldscale system is a way of 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 40 percent of the nominal Worldscale rate for the voyage.

The biggest one-day change for crude-oil tankers was for Aframax ships hauling 80,000 metric-ton cargoes to the U.S. Gulf Coast from the Caribbean, which added 6.3 percent to 112.05 Worldscale points, exchange data show. For ships carrying refined fuels, the largest move was for 37,000-ton shipments to the U.S. East Coast from Europe, which fell 3.9 percent to 158.96 points.

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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