Mideast Oil Cargo Demand Slump Seen by Platou Curbing Earnings
Reduced shipments of Middle East oil to Asia and an increase in the supply of the largest crude carriers curbed earnings for shipowners on the benchmark route, according to RS Platou Markets AS.
The number of cargoes available for loading in the Middle East during July declined by about 20 from June, Platou said in an e-mailed report today. Refineries in Asia undergo maintenance during the summer period, according to Platou, the investment- banking unit of Norway’s largest shipbroker. The very large crude carrier fleet is set to expand 6.9 percent this year, exceeding 4.7 percent demand growth, according to data from Clarkson Plc, the world’s largest shipbroker.
“We believe the rate decline thus reflects slower activity, reduced volumes, likely shorter distances and possibly increased vessel supply as floating storage declined,” Frode Morkedal, an analyst at Platou, said in the report.
The number of VLCCs booked to haul Middle East crude slid to an 18-month low of 113 in July, the lowest since January 2011, Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Group, said by e-mail. He singled out a drop in bookings to carry the region’s crude to China as the biggest contributor.
VLCCs able to haul 2 million barrels of Middle East crude to Asia made an average return of minus $3,209 in July, the worst on record for figures going back to July 2008, according to data compiled by Bloomberg.
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