Oil-Tanker Surplus Seen at Two-Year High in Broker SurveyRob Sheridan
A glut of the largest oil tankers seeking cargoes in the Persian Gulf touched a two-year high, a Bloomberg News survey showed.
There are 20 percent more very large crude carriers for hire over the next 30 days than there are likely cargoes, the median estimate in a survey of six shipbrokers and owners today showed. That’s the highest level for this time of year since 2011, according to figures compiled by Bloomberg, and unchanged from last week’s corresponding survey.
Charter costs for VLCCs on the industry’s benchmark Saudi Arabia-to-Japan voyage are within about 5 percent of this year’s lowest level, reached in January, figures compiled by Bloomberg show. The ships lost money on the journey for seven weeks through March 14 and returns became negative again on March 28, according to the Baltic Exchange in London.
“Slowing fleet growth alone is insufficient to return the sector to profitability, given the current state of oversupply in the crude oil-tanker market and the fact that crude oil-tanker demand growth remains flat at best,” Doug Mavrinac, an analyst at Jefferies & Co. in Houston, said in an e-mailed report yesterday. The tanker market will stay “weak” through next year, the investment bank said.
Hire rates for supertankers on the benchmark voyage slipped 0.4 percent to 31.92 industry-standard Worldscale points, the first decline in a week, figures from the exchange showed today. Costs reached 30.44 points on Jan. 28.
Daily losses for VLCCs on the benchmark route narrowed to $637 from $714, according to the exchange. The ships, each able to hold 2 million barrels of oil, were earning about $16,500 a day at the start of the year.
The exchange’s assessments don’t reflect speed cuts aimed at reducing fuel costs, the main expense for owners, who can slow tankers on return journeys after unloading cargoes to boost returns. The price of fuel, or bunkers, climbed 1.6 percent to $609.59 a metric ton today, data compiled by Bloomberg from 25 ports showed.
The VLCC fleet’s total carrying capacity will rise 5.1 percent this year, above demand growth of 4.9 percent, according to Clarkson Plc, the 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 31.92 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 638, data from the bourse showed.