Oil-Tanker Surplus Expands as Demand to Hire Vessels Wanes

The surplus of supertankers competing for 2 million-barrel cargoes of Persian Gulf oil expanded as demand to hire the ships waned.

There are 24 percent more very large crude carriers for charter over the next 30 days than cargoes, according to the median estimate of six shipbrokers and owners in a Bloomberg News survey. That was 1 percentage point more than last week and returned the excess to the level reached Jan. 29, when it was the biggest since Sept. 5.

VLCCs began losing money on the benchmark Saudi Arabia-to-Japan voyage on Jan. 24, according to the Baltic Exchange in London. Returns on the route were positive in only four sessions of 2012’s third quarter. Financial markets in China, the world’s second-biggest consumer of crude, are closed this week for the Lunar New Year holiday.

“Activity remains relatively light,” analyst Sam Margolin at investment bank Dahlman Rose & Co. in New York said in an e-mailed report yesterday.

Daily losses for VLCCs on the benchmark journey narrowed to $6,997 from $7,038 yesterday, according to the exchange’s data. Its assessments don’t take into account speed cuts aimed at curbing fuel use. The price of fuel is the highest since September and gained for a fourth session today to $659.71 a metric ton, figures compiled by Bloomberg from 25 ports showed.

Worldscale Points

Charter rates for VLCCs on the benchmark route were unchanged at 31.29 Worldscale points, according to the exchange’s figures.

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.

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 31.29 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, rose 0.6 percent to 647, according to the exchange. It’s at the highest level since Jan. 24.

Before it's here, it's on the Bloomberg Terminal.