Tanker Rates Fall a Third Day as Glut Offsets Increased Charters

Rates for the largest oil tankers on the benchmark route fell for a third day on speculation too many ships competing for cargoes outweighed increased bookings.

Charter costs for very large crude carriers hauling 2 million barrels of Middle East oil to Asia slipped 0.2 percent to 38.33 industry-standard Worldscale points, according to the Baltic Exchange, the London-based publisher of freight rates. The weekly decline of 4 percent was the biggest since April 5.

Traders booked seven ships, the most this week, according to Kevin Sy, a Singapore-based freight-derivatives broker at Marex Spectron Pte. While June charters came earlier than expected, the vessel glut absorbed the demand, with one cargo receiving 10 offers, Simpson, Spence & Young Ltd., the world’s second-largest shipbroker, said in an e-mailed report today.

“Although things finally got busier, it was not enough to keep rates at same levels,” Sy said in the report. “There were more than enough ships.”

Daily earnings for the voyage rose 1.1 percent to $10,881, according to the exchange. Those assessments don’t reflect owners cutting speeds to save on fuel, their biggest expense. The price of ship fuel, known as bunkers, increased 0.6 percent to $616.15 a metric ton, 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, rose 0.2 percent to 612. The biggest move in the dirty tanker market was for Aframaxes to the U.S. Gulf Coast from the Caribbean, rising 3.7 percent to 115.68 points. The biggest change in the market for ships hauling refined fuels was for gasoline tankers to the U.S. East Coast from the Caribbean, up 3.6 percent to 137.75 points.

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