Tanker Rates Slide as Vessel Glut Absorbs Higher Cargo Demand

The cost of shipping 2 million barrels of Middle East crude oil to Asia, the benchmark route, fell after 11 sessions of gains as a glut of tankers absorbed increased demand for cargoes.
Rates for very large crude carriers on the largest trade route slid 0.9 percent to 39.63 industry-standard Worldscale points, according to the Baltic Exchange, the London-based publisher of shipping costs. That was the biggest decline since April 9, data show.
Rates rose in the past two weeks as traders finished booking tankers to load in May, totaling 129, up from 123 in April, according to Fearnresearch, a unit of shipping and investment-banking company Astrup Fearnley. June bookings have been slow, and the charters weren’t enough to lead rates higher because too many ships are competing for cargoes, Fearnresearch said in an e-mailed report today.
“The overhang of available tonnage has been further reduced, but far from enough to change the long-term fundamentals,” Fearnresearch said in the report. “In the short view, rates are stable but inactive/quiet.”
Daily earnings for the voyage advanced 1.7 percent to $12,471, the highest since Jan. 16, 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, fell 0.3 percent to $604.84 a metric ton, according to data compiled by Bloomberg from 25 ports worldwide.
Port Tariffs
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 0.2 percent to 614. The biggest move in the dirty tanker market was for VLCCs to the U.S. Gulf Coast from the Middle East, falling 1.2 percent to 22.86 Worldscale points, according to the exchange. The biggest change in the market for ships hauling refined fuels was for gasoline tankers to the U.S. East Coast from Europe, dropping 3.7 percent to 153.13 points.
Source: Bloomberg