A surplus of the largest oil tankers competing to load crude at Persian Gulf ports stayed unchanged after reaching a four-week high last week, a survey showed.
There are 10 percent more very large crude carriers available for hire over the next 30 days than there are likely cargoes, according to a Bloomberg survey of seven shipbrokers and owners today. The glut was the biggest since Jan. 10 as of last week.
The VLCC surplus reached a 14-month low of 5 percent on Jan. 17, helped by stronger crude demand before China’s New Year. VLCCs on the benchmark Saudi Arabia-to-Japan voyage are earning $9,765 daily, according to the London-based Baltic Exchange today. That’s down 70 percent from Jan. 20, the last day before Chinese markets closed for a week for the New Year.
“Overcapacity continues to impact the market negatively,” Oslo-based investment bank Pareto Securities AS said in an e-mailed report today.
The exchange’s assessments of VLCC returns don’t reflect speed cuts aimed at reducing fuel costs, vessel owners’ main expense. Owners can curb those expenses, boosting returns, by slowing ships on return journeys after unloading of cargoes.
The price of bunker fuel, vessel owners’ main expense, declined 0.2 percent to $716.80 a metric ton, data compiled by Bloomberg from 25 ports worldwide showed.
Charter rates for VLCCs, each able to haul 2 million barrels of crude, on the benchmark route gained 2.7 percent to 50.72 Worldscale points today.
More Than 320,000 Routes
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.
The Baltic Dirty Tanker Index, a broader measure of oil-shipping costs that includes vessels smaller than VLCCs, gained 0.3 percent to 791.
China is the world’s second-biggest consumer of crude oil after the U.S.