Tanker Rates Little Changed as Glut Caps Increased China Demand

Rates for the largest oil tankers on the busiest trade route were little changed today on speculation the excess of vessels competing for cargoes capped gains from increased demand for shipments to China.

Charter costs for very large crude carriers hauling 2 million barrels of Saudi Arabian oil to Japan rose 0.7 percent to 31.5 industry-standard Worldscale points, according to the Baltic Exchange, the London-based publisher of freight rates. Daily losses on the voyage narrowed from $3,130 to $1,780, the smallest since March 28, when returns became negative, according to the exchange.

April demand reached a six-month high as Chinese traders booked six ships, Frode Moerkedal, an Oslo-based analyst at RS Platou Markets AS, said in an e-mailed report, citing brokers he didn’t identify. Imports may rise as refineries leave routine maintenance this month, he said. Still, the abundance of available ships hindered gains, according to the report.

“The supply situation is keeping a lid on any uptick in freight rates,” Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo, said in an e-mailed report. “Despite expectations of higher demand going forward due to refineries returning to operation, we do not see a situation where crude tanker freight rates climb higher in the near term.”

Largest Cost

The exchange’s assessments don’t reflect owners cutting speeds to save on fuel, their biggest expense. The price of ship fuel, known as bunkers, fell 1.2 percent to $609.99 a metric ton, this year’s lowest level, according to data compiled by Bloomberg from 25 ports worldwide.

Worldscale points are a percentage of a nominal rate for more than 320,000 specific routes. Flat rates for every voyage, quoted in dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

The Baltic Dirty Tanker Index, a wider measure of oil-shipping costs that includes smaller vessels, fell 1.3 percent to 630, the seventh straight decline and the lowest since Jan. 18, according to the exchange.

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