Oil-Tanker Rates Climb for Sixth Session on Demand Speculation
Hire costs for the biggest oil tankers plying the industry’s busiest trade route climbed for a sixth session amid speculation more ships will be chartered to help meet summer-season demand.
Booking rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage rose 1 percent to 34.34 industry-standard Worldscale points, figures from the London- based Baltic Exchange showed today. Costs are the highest since Jan. 23, according to the data.
The surplus of vessels available to load in the Persian Gulf over the next four weeks declined by seven to 77, according to data from Marex Spectron Group. That compares with 89 tankers at the start of the month, the figures showed. VLCCs outnumbered cargoes by 25 percent as of March 5, the most since Oct. 4, 2011, according to a Bloomberg News survey of shipbrokers.
“We see the potential for a short-term surge in activity for those starting to position for driving season/summer demand,” Erik Nikolai Stavseth, an analyst at Oslo-based investment bank Arctic Securities ASA, said in an e-mailed report today.
Driving season denotes the period between the U.S. holidays of Memorial Day in late May and Labor Day in early September, when gasoline demand in the country tends to peak.
VLCCs are earning between $10,000 and $15,000 a day after adjusting for speed cuts intended to limit fuel use, known as slow-steaming, Stavseth said. Each of the tankers can hold 2 million barrels of oil.
The exchange’s assessments of VLCC earnings fail to account for slow-steaming or owners’ efforts to secure cargoes for a voyage’s return leg. The ships are earning $793 a day on the benchmark voyage, its data showed today, the first positive return since Jan. 23. Tankers were losing $7,694 daily on the route as of Feb. 14, this year’s low.
The price of fuel, or bunkers, the industry’s main expense, was little changed at $625.34 a metric ton today, figures compiled by Bloomberg from 25 ports showed. Prices dropped 1 percent this week, the third slide in four.
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 34.34 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, lost 0.9 percent to 663, the lowest since March 13, according to the bourse.
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