Mideast crude tanker rates at 3-month low
London, August 8, 2013
Crude oil tanker earnings on the major Middle East route fell to their lowest in over three months on Wednesday as a surplus of vessels took its toll on rate sentiment.
The world's benchmark VLCC export route from the Middle East Gulf (MEG) to Japan reached W33.70 in the worldscale measure of freight rates, or $2,223 a day when translated into average earnings and were at their lowest since May 3.
That compared with W33.73 or $2,356 a day on Tuesday and W34.17 or $3,167 a day last Wednesday.
"The VLCC market ex MEG remained fairly active the last week, but slowed down the last couple of days. Rates continued to be under pressure as supply of tonnage is building up," broker Fearnleys said on Wednesday.
Last month earnings rose to their highest in over seven months, lifted by stronger demand and the unrest in Egypt.
VLCC rates from the Gulf to the US were at W21.35 on Wednesday versus W21.58 on Tuesday and W22.42 last Wednesday.
Rates for suezmax tankers on the Black Sea to Med route reached W64.83 or $9,069 a day. That compared with W63.96 or $7,962 a day on Tuesday and W61.79 or $6,571 a day last Wednesday.
Brokers said gains in the West Africa suezmax market were feeding into Med rates, helped by buoyant cargo interest.
"Suezmaxes are forging ahead," Arctic Securities analyst Erik Nikolai Stavseth said.
Tanker players said downside risks remained, with the market still struggling with more tankers, ordered when times were good, still to join the global fleet this year. Tanker owners have also faced higher fuel costs, which have eaten into earnings.
Average earnings per day are calculated after a vessel covers its voyage costs such as bunker fuel and port fees. VLCC operating costs, including financial costs, are estimated at around $10,000 a day. – Reuters