A glut of supertankers competing for two million-barrel cargoes of Middle East crude oil stayed unchanged, cutting earnings from the ships by 19 per cent to their lowest in almost 13 months.
A glut of supertankers competing for two million-barrel cargoes of Middle East crude oil stayed unchanged, cutting earnings from the ships by 19 per cent to their lowest in almost 13 months.There are 28 per cent more very large crude carriers, or VLCCs, for hire over the next 30 days than there are cargoes, according to the median estimate of six shipbrokers surveyed by Bloomberg News yesterday. That's the same as a week ago.
The oversupply is creating a 'tangible' risk that shipping analysts will cut earnings estimates for VLCC owners in the fourth quarter and next year, Martin Korsvold and Wilhelm Gedde-Dahl, analysts at Pareto Securities AS in Oslo, said in a note yesterday. Still, demand may accelerate this week before an oil-industry conference in Singapore and because booking levels are lagging prior months, they said.
Rental income from the industry's benchmark Saudi Arabia-to-Japan route has been below owners' daily running costs since Aug 24, according to data from Drewry Shipping Consultants Ltd and the Baltic Exchange, both based in London.
Crew, insurance and other running costs are US$11,601 a day, Drewry estimates. Rental income has been below that for 30 sessions and slid 19 per cent to US$4,448 a day yesterday, according to the exchange. hat's the lowest since Sept 17 last year.
The surplus in the Middle East averaged 21 per cent in the third quarter, compared with a 9 per cent excess in the three months to June 30. Frontline Ltd, based in Hamilton, Bermuda, is the world's largest VLCC operator. Overseas Shipholding Group Inc is the biggest US owner, while Euronav NV in Antwerp is the largest publicly traded carrier in Europe.
Frontline said on Aug 27 its VLCCs require US$30,900 a day to break even. The figure includes financing costs. Tanker operators lease the vessels on longer-term charters and in markets away from the Persian Gulf-to-Asia route where earnings can be higher than those achieved in the spot market.
The Baltic Dirty Tanker Index climbed 0.7 per cent to 689 points. The gauge was bolstered by a 19 per cent advance in charter rates for aframax-class tankers to ship 80,000-tonne cargoes of crude oil across the Mediterranean Sea.
A strike at the Fos and Lavera oil terminals at the French port of Marseille entered its ninth day yesterday, delaying tankers that would otherwise be loading or discharging cargoes.