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Oil-Tanker Rates Drop for Second Week as Vessel Surplus Expands

Charter costs for the biggest oil tankers hauling Middle East crude to Asia fell for a ninth session, rounding out a second weekly retreat, as a surplus of ships seeking cargoes expanded.

Hire rates for very large crude carriers on the benchmark voyage between Saudi Arabia and Japan slipped 0.2 percent to 31.91 industry-standard Worldscale points, according to figures from the Baltic Exchange in London today. Costs declined 6.3 percent this week. Each of the ships can hold 2 million barrels of oil.

There are 87 tankers available in the gulf over the next 30 days, two more than yesterday, Marex Spectron Group said in an e-mailed report. The global VLCC fleet’s total carrying capacity will rise 5.1 percent this year, above demand growth of 4.9 percent, according to Clarkson Plc, the biggest shipbroker. Public holidays in Europe weighed on rates, according to an e-mailed report from London-based E.A. Gibson Shipbrokers Ltd.

“No spring sunshine for beleaguered VLCC owners as April fixing begins to enter its end-game phase,” Gibson said. “This week rates slid back to the bottom of their recent cycle.”

Daily losses for VLCCs plying the benchmark route narrowed to $2,931 from $3,987 yesterday, according to the exchange. The ships lost money on the journey for seven weeks through March 14, according to its assessments, which don’t reflect speed cuts on return journeys after unloading of cargoes aimed at reducing fuel costs.

Price of Fuel

Marine fuel, or bunkers, ship owners’ main expense, dropped to the lowest level since the start of the year, according to figures compiled by Bloomberg from 25 ports worldwide. Prices retreated 1.9 percent, the most since Feb. 22, to $616.51 a metric ton.

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 31.91 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, gained 4.4 percent to 707, according to the exchange. The increase was the largest since December 2011, figures compiled by Bloomberg showed. The gauge advanced 7 percent this week, the most since January of last year.

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