Rates for the largest oil tankers will rally as Persian Gulf exports rebound during the next several months, driven by increased demand from U.S. refineries, according to Morgan Stanley.
As much as 500,000 barrels a day of additional crude will be shipped from the Middle East through the Northern Hemisphere summer, requiring about 20 very large crude carriers, Fotis Giannakoulis, a New York-based analyst at the investment bank, said in an e-mailed report today. Day rates for the vessels, which averaged $7,000 this year, will rise to $30,000, a level last seen in November, he said.
Bookings for spot cargoes from the region averaged 60 million barrels a week during the past three weeks, 30 percent higher than in the preceding six, according to the report. Volumes scheduled for the U.S. surged to 19 million barrels a week on average in the past four weeks from 10 million in early January, Morgan Stanley’s figures show.
“As U.S. Gulf refineries return from maintenance, long-haul westbound barrels from the Arabian Gulf are expected to follow as Middle East becomes the marginal supplier,” Giannakoulis said in the report. “As Saudi production increases, we could see the balance returning to more reasonable levels, helping rates to restore part of the recent losses.”
Longer term, rates will remain curbed by weakening demand in the U.S. and Europe, increased North American production and a glut of vessels, Giannakoulis said.
Rates for supertankers on their busiest trade route to Asia from the Middle East rose for a fifth day, adding 0.4 percent to 34 industry-standard Worldscale points today, according to the Baltic Exchange, the London-based publisher of shipping costs. Daily losses on the benchmark voyage narrowed to $252, the smallest since returns became negative on Jan. 24, exchange data show.
Those assessments don’t account for owners cutting speeds to save fuel, their biggest expense. The price of ship fuel, or bunkers, fell 0.4 percent to $625.41 a metric ton, according to data compiled by Bloomberg.
Worldscale points are a percentage of a nominal 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 smaller tankers, increased for the first time in eight sessions, gaining 1.2 percent to 669, according to the exchange.