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Oil demand may drop quickly

Oil demand may drop quickly
The cost of delivering Middle East crude oil to Asia, which fell the most in three weeks, may drop for a fourth day as the supply of cargoes plunges.

The cost of delivering Middle East crude oil to Asia, which fell the most in three weeks, may drop for a fourth day as the supply of cargoes plunges.

The cost of delivering Middle East crude oil to Asia, which fell the most in three weeks, may drop for a fourth day as the supply of cargoes plunges. Middle East members of the Organisation of Petroleum Exporting Countries (Opec) are cutting output at the fastest pace in at least two decades to buoy the price of the commodity, according to Bloomberg estimates. Frontline Ltd, the largest supertanker company, said on February 26 oil demand may drop more quickly than "major agencies" are forecasting. "So far, everything leads us to believe that March will be light" in terms of vessel bookings, Nikos Varvaropoulos, an official at Optima Shipbrokers, said by e-mail.

Oil companies have hired about 48 supertankers to collect Middle East crude this month, down from 103 in January and 98 in February, according to Optima. Rentals have yet to finish.

Zhuhai Zhenrong Company, a Chinese state-backed oil trader, booked the tanker Shinyo Kannika for 40 Worldscale points, according to a report issued on Thursday from Oslo-based shipbroker SeaLeague.

That was 11 per cent below the London-based Baltic Exchange's benchmark rate, which slipped three per cent to 44.89 points Thursday for its third straight loss.

Vessel supply is "healthy," Varvaropoulos said. Asian refineries will perform routine annual repairs from next month, diminishing their demand for crude cargoes and meaning spare ships may be available for hire now.

Globally the carriers are making $36,324 (Dh133,418) a day. Frontline said it needs $32,100 a day to break even on each of its supertankers, a 7.5 per cent decrease compared with the status as at November 28.

Frontline's break-even rate is the amount needed to cover daily running costs for each ship, interest and scheduled loan repayments, and corporate overhead costs.

It does not include capital spending requirements, final loan repayments and ships hired from other owners for short-term purposes. So far this year, hire rates have averaged $40,349 a day globally and $45,279 a day on the Middle East-Japan route.

Between August and February, Saudi Arabia, Iran, Kuwait, the UAE and Qatar between them slashed output by 15.8 per cent to 16.6 million barrels a day, according to Bloomberg estimates.

Over a rolling seven-month period, that's the fastest pace of decline since 1988.

www.TurkishMaritime.com.tr

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