Oil-Tanker Rates Continue Winning Streak as Bookings Trim Glut

Hire costs for the biggest oil tankers plying the industry’s busiest trade route rose for a fifth session, as the number of ships booked trimmed the glut of available vessels in the Persian Gulf.

Charter rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage added 1.4 percent today to 33.89 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed. That’s the longest winning streak this year, according to bourse data.

The surplus of available vessels for loading in the Persian Gulf over the next four weeks shrank by two to 87 ships, according to data from Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Group. 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 Clarkson Plc, the largest shipbroker.

“Some more activity in the VLCC market this week with 11 fixtures on Tuesday and eight yesterday has helped rates to higher levels,” Erik Nikolai Stavseth, an analyst at Oslo-based investment bank Arctic Securities ASA, said in a report today. “We think the increase in activity could last for some time and thus see further upside to freight rates in the near-term.”

Daily losses for VLCCs on the benchmark route as determined by the exchange narrowed to $2,171 from $2,901 yesterday. The ships were losing $7,694 a day a week earlier, exchange data show. Each tanker is able to hold 2 million barrels of oil, and ships hauling Middle East crude to Asia earned money in only four sessions in the third quarter on the journey.

Improving Returns

The exchange’s assessments fail to account for owners’ efforts to improve returns by securing cargoes for a voyage’s return leg or reducing speed to burn less fuel, known as slow-steaming. The price of fuel, or bunkers, the industry’s main expense, fell for a third consecutive session, sliding 0.3 percent to $654.26 today, figures compiled by Bloomberg from 25 ports showed.

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 33.89 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, added 0.6 percent to 673, the highest since Jan. 4, according to the bourse.

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