Oil-Tanker Rates Rise for Fourth Session as Ship Surplus Shrinks

Hire costs for the largest oil tankers on the industry’s busiest trade route rose for a fourth session as increased bookings of the ships reduced a surplus of available vessels.

Charter rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage gained 0.3 percent to 33.88 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That’s the highest level since Feb. 22.

Tanker charters in the Persian Gulf over the last two days reduced the vessel surplus by 12, according to an e-mailed report from Marex Spectron Group. The number of supertankers hired so far in March is five more than in all of February, when the monthly tally was the smallest since November 2010, Marex Spectron data show.

“There are probably five to 12 cargoes to go for March with 32 vessels available,” Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron, said in the report. “Unless activity for the April program suddenly explodes today, rates will be steady to inching up.”

Daily losses for VLCCs on the benchmark route widened to $801 from $582 yesterday, exchange data showed. The tankers were losing $7,694 a day as of Feb. 14, this year’s worst return for owners. The ships, each able to hold 2 million barrels of crude, earned money in only four sessions of 2012’s third quarter on the journey.


Still, 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, declined 0.4 percent to $627.77 a metric ton, figures compiled by Bloomberg from 25 ports showed.

The VLCC fleet’s total carrying capacity will rise 5.1 percent this year, near demand growth of 5.2 percent, according to data from Clarkson Plc, the world’s biggest 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 33.88 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 661 today, according to the exchange.