LONDON (Bloomberg) — Bermuda-based Frontline Ltd., the world's biggest operator of supertankers, said the market is still "vulnerable" after almost five months of unprofitable rates. The shares fell the most in two and a half months in Oslo trading.

Shipowners cut speeds and idled vessels this year as spot rates plunged as much as 71 percent from January to $25,849 now, according to data from the Baltic Exchange. While the Northern Hemisphere's winter should spur oil demand, shipping will remain "vulnerable as new tonnage enters the market," Frontline said, referring to the biggest-ever shipbuilding programme.

"They are not bullish, they are fairly realistic," said Petter Narvestad, an analyst at Fondsfinans ASA in Oslo who recommends selling the shares. "They are facing a tougher market balance than we've seen for some time."

Frontline needs $31,300 a day to break even on its supertankers. Returns from the industry's benchmark trade route have exceeded that level on seven occasions since June 29, according to Baltic Exchange data.

Frontline fell as much as 5.5 percent, the most since September 8. The stock was down 7.6 kroner, or 4.5 percent, at 162.3 kroner at 4:04 p.m. Oslo time, leading declines in the Norwegian benchmark OBX Index. The shares are little changed in 2010, giving the company a market value of 12.6 billion kroner ($2.1 billion).

Third-quarter net income was $12.26 million, or 16 cents a share, compared with a year-earlier net loss of $5.61 million, or seven cents, company said in a statement today. That beat the $7.6 million average of 14 analysts' estimates compiled by Bloomberg. Revenue rose 7.8 percent to $251.1 million.

Frontline's biggest ships — very large crude carriers, or VLCCs — made an average of $29,800 a day in the quarter. Overseas Shipholding Group, the largest US owner, said its same-size vessels made $32,017 a day in the spot market. Those controlled by Antwerp, Belgium-based Euronav NV earned $30,900 a day.

VLCC earnings will on average be "fairly decent" next year as new ships are delayed or canceled and Chinese demand for crude oil strengthens, Jens Martin Jensen, chief executive officer of Frontline's management unit, said on a conference call.

The global oil-tanker fleet will expand by 86.5 million deadweight tons in the next two years, equal to about 27 percent of current capacity, Morgan Stanley said in a report October 14. That would exceed the previous record of 79.8 million deadweight tons set in 1974-1975, according to Clarkson Plc, the world's largest shipbroker. Shipowners ordered the vessels before rates plunged from $177,036 a day in July 2008.

Frontline, whose chairman is Norway-born billionaire John Fredriksen, said in July and August it was rejecting unprofitable cargoes.

The company has vessels on long-term charters earning more than the benchmark Persian Gulf-to-Asia route. Frontline also seeks to reduce the time its vessels sail empty by identifying consecutive charters, first from the Middle East to Europe, then from Europe to the US, and finally from the Caribbean Sea or West Africa to Asia, its annual report shows.

The Organisation of Petroleum Exporting Countries, accounting for about 40 percent of world crude supply, cut output 0.4 percent to 29.1 million barrels a day in the third quarter from the second.

Frontline declared a dividend of 25 cents a share in respect of the third quarter.