Oil-Tanker Returns Plunge Most This Year on Dearth of Cargoes

Returns for the largest oil tankers on the industry’s busiest trade route, linking the Middle East and Asia, plunged the most this year as traders booked the ships they needed for January with vessels left to spare.

Daily earnings for very large crude carriers on the benchmark route between Saudi Arabia and Japan slumped 13 percent to $10,055, figures from the London-based Baltic Exchange showed today. That was the biggest drop since Nov. 28 and the 15th in 16 sessions.

Demand to hire VLCCs was “moderate” in the Persian Gulf this week, according to New York-based investment bank Dahlman Rose & Co. Each of the vessels can hold 2 million barrels of crude. Charterers are finishing loading this month’s cargoes in the Middle East, curbing tanker bookings, Oslo-based RS Platou Markets said in an e-mailed report today.

“Activity has slowed as the January cargo program ends,” Platou said. “Early February cargoes have been met by sufficient ship availability.”

Charter rates for VLCCs on the benchmark voyage slid 1.2 percent to 40.09 Worldscale points, the exchange said. That was a fifth successive decline and left hire costs down 6.1 percent for the week.

The combined carrying capacity of the world’s VLCCs will expand 5.3 percent this year, below demand growth of 6.3 percent, according to estimates from Clarkson Research Services Ltd., a unit of the largest global shipbroker.

Marine Fuel

The exchange’s assessments don’t reflect speed cuts aimed at curbing use of ship fuel, or bunkers, the industry’s biggest expense. The price of fuel added 0.4 percent to $623.78 a metric ton, according to figures compiled by Bloomberg from 25 ports.

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 40.09 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, was unchanged at 630, according to the exchange. That snapped a 15-session losing streak, the longest since a run of declines that ended April 14, 2011, according to the exchange.

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