Persian Gulf tanker rates may extend gain as ship supply slips
LONDON (Bloomberg) — The cost of delivering Middle East crude to Asia, up 20 percent in two sessions, may extend its gain as February demand further shrinks a fleet already depleted by the use of carriers for storing oil at sea.
There's been a steady flow of cargoes for the past week as oil companies seek to book tankers for their remaining February consignments, Denis Petropoulos, head of tankers at London-based Braemar Shipping Services Plc, said.
Traders probably have options on rental contracts to store 20 to 40 million barrels of crude at sea on top of the 50 million barrels the International Energy Agency yesterday estimated was being held, he said.
The past week to 10 days' demand helped erode ship supply relative to outstanding cargoes and "cleared out" vessels that were being offered for leasing by Asian oil companies, he said by phone. That's allowing owners with tankers still for hire to win better hire rates.
Royal Dutch Shell Plc, Europe's largest oil company, hired an unidentified tanker operated by TMT Co. for 52.5 Worldscale points for a cargo to Asia, according to a report today from Athens-based Optima Shipbrokers. That's 13 percent above the London-based Baltic Exchange's benchmark assessment of 46.66 points, based on Saudi Arabian shipments to Japan.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes.
Flat rates for every voyage, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
A rate of 46.66 points works out at $37,567 a day, according to the Baltic Exchange. Globally the carriers are making $35,306 a day.
Frontline Ltd., the largest owner of the vessels, said on November 28 it needs $34,700 a day to break even on each of its supertankers, a 10 percent increase compared with August 21.
