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All routes sank further

All routes sank further
The VLCC spot market is looking worse than at any time in recent memory as rates on all routes sank further this week on limited activity.

The VLCC spot market is looking worse than at any time in recent memory as rates on all routes sank further this week on limited activity.

The VLCC spot market is looking worse than at any time in recent memory as rates on all routes sank further this week on limited activity.

Rates continue to fall without any apparent resistance whatsoever.

?Indicators are all horrible,? another broker told. ?Too many ships available for too little cargoes. Owners are already not breaking even, but rates are still falling.?

Brokers are reporting MEG-East voyages at around WS 25 currently, while the MEG-West route cracked a two-week long stalemate at WS 22.5 to fall to WS 20.

Voyages moving West African crude to the US Gulf also sank from WS 45 last week to WS 42.5 this week.

According to Drewry Shipping Consultants, MEG-East spot rates are at their lowest in at least 11 years, and may decline further on the back of newbuilding entries, Bloomberg reported.

According to The Baltic Exchange, the rate for a spot voyage from Saudi Arabia to Japan was going at WS 25.81 on Wednesday - meaning average earnings of $7,490 per day per vessel.

Average cash break-even earnings for the VLCC spot market is below $25,000 per day per vessel, but break-even rates are calculated differently across the industry, with some companies like Frontline Ltd. reporting its break-even rate as high as $34,700 per VLCC.

Crude oil tanker markets are getting slammed by OPEC supply cuts and weakening global oil demand, according to brokers.

They say that vessel over-supply is building up on the 'twin effects' of OPEC export reductions and declining demand, with no real positive factor in sight to 'mop up' the excess tonnage.

?OPEC is supposedly trying its best to cut 4.2 million barrels per day (bpd) from the market. Full compliance is equivalent to at least two VLCCs out of a job everyday,? said one broker.

?The total number of April cargoes from the MEG appears to be about the same as was seen in March, and this is far from sufficient to employ the present amount of available VLCC tonnage,? said Fearnleys.

Meanwhile, the Paris-based International Energy Agency (IEA) has revised its 2009 global oil demand further downwards by 1 million barrels per day (bpd).

Its latest Oil Market Report now pegs 2009 global oil demand at 83.4 million bpd, a 2.4 million bpd drop from 2008 global oil demand levels.

www.TurkishMaritime.com.tr

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