Oil-Tanker Glut Near Five-Month High Amid Demand Speculation

The glut of supertankers competing for 2 million-barrel cargoes of Persian Gulf oil stayed near a five-month high amid speculation demand growth for the vessels is poised to weaken.

There are 23 percent more very large crude carriers for charter over the next 30 days than cargoes, according to the median estimate of seven shipbrokers and owners in a Bloomberg News survey today. The excess reached 24 percent last week, the biggest since Sept. 5.

Saudi Arabia, the world’s largest oil exporter, cut output for a third month in January, according to production estimates compiled by Bloomberg. The nation’s reduced supply will probably curb demand for tankers during the first half of 2013, RS Platou Markets AS, an Oslo-based investment bank, said in a report yesterday. Available VLCCs in the Persian Gulf over the next four weeks shrank by just two to 110 vessels, according to Marex Spectron Group.

“With tonnage supply still twice as much as demand, rates are again unlikely to climb today,” Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron, said in a report.

Fuel Costs

Daily losses for VLCCs on the benchmark Saudi Arabia-to-Japan voyage widened to $5,382 from $5,009 yesterday, Baltic Exchange data showed. The bourse’s assessments, which turned negative on Jan. 24, don’t take into account the fact the vessels can cut speeds to lower fuel costs. The price of fuel lost 0.1 percent to $642.91 a metric ton, according to figures compiled by Bloomberg from 25 ports.

VLCCs earned money in only four sessions in the third quarter on the journey, according to the exchange. The combined carrying capacity of the world VLCC fleet will expand 5.3 percent this year, below demand growth of 5.9 percent, according to estimates from Clarkson Research Services Ltd., a unit of the largest global shipbroker.

Demand strengthened yesterday because Chinese traders were booking additional vessels before the Lunar New Year holidays, Marex Spectron said today. Financial markets in the country will be closed next week for the occasion.

Charter rates for VLCCs on the benchmark voyage slipped 0.3 percent to 31.8 Worldscale points, the exchange said. That followed four sessions of gains.

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 31.8 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 0.3 percent to 632, according to the exchange. That was a third successive decline.