Crude oil tanker earnings on the key Middle East route fell to their lowest in over 18 months on Tuesday as growing vessel supply weighed on rates, Reuters reports.
Brokers said higher bunker fuel costs were also eating into earnings.
The world's benchmark Very Large Crude Carrier (VLCC) export route from the Middle East Gulf (MEG) to Japan DFRT-ME-JAP fell to W49.10 in the Worldscale measure of freight rates, or $1,030 a day, from W49.92 or $2,272 a day last Tuesday -- at their lowest since Sept. 2009 when earnings plummeted due to economic turmoil.
"Another testing week for owners participating in the MEG VLCC market. Tonnage remains well-supplied, whilst the emergence of a number of oil company relets added to charterers' options," broker SSY said.
"Further to this, and perhaps somewhat surprisingly ahead of the Easter and May Day holidays, fresh enquiry was scarce. As a result, rates slipped further."
The Baltic Exchange did not publish data on Monday or last Friday due to a public holiday.
VLCC rates have been volatile in recent months due to a supply overhang caused in part by the end of a trading play, which led to storage of millions of barrels of crude oil on tankers at sea.
"In 2011, tanker oversupply will continue to be the most dominant factor in rate formation. This state of oversupply will be made all the worse should there be widespread and irreplaceable oil supply disruption. There will be fewer cargoes to carry, prices will rise, and demand destruction will be put in train," HSBC said in a report.
"Despite global oil demand recovering strongly, the impact of new deliveries is depressing rates."
Average earnings have fallen this month below the operating cost level of a VLCC, which is estimated at around $10,000 a day.
"Decent VLCC activity to start the week yesterday, but rates remain below the W50 mark," Arctic Securities said.
Cross-Mediterranean aframax tanker rates fell to W98.96 from W102.50 last Tuesday. Aframax vessels on the Med route, which transport the majority of Libya's crude oil, normally carry up to 600,000 barrels.
Last month aframax rates jumped to their highest this year as buyers scrambled to get cargoes from Libya. But a subsequent drop in activity has added to tanker availability, weighing on rates.
Rates for suezmax tankers on the Black Sea to Med route rose to W100.19 from W82.62 last Monday. Brokers said a boost of activity had driven gains in recent days.
Brokers said higher bunker fuel costs were also eating into earnings.
The world's benchmark Very Large Crude Carrier (VLCC) export route from the Middle East Gulf (MEG) to Japan DFRT-ME-JAP fell to W49.10 in the Worldscale measure of freight rates, or $1,030 a day, from W49.92 or $2,272 a day last Tuesday -- at their lowest since Sept. 2009 when earnings plummeted due to economic turmoil.
"Another testing week for owners participating in the MEG VLCC market. Tonnage remains well-supplied, whilst the emergence of a number of oil company relets added to charterers' options," broker SSY said.
"Further to this, and perhaps somewhat surprisingly ahead of the Easter and May Day holidays, fresh enquiry was scarce. As a result, rates slipped further."
The Baltic Exchange did not publish data on Monday or last Friday due to a public holiday.
VLCC rates have been volatile in recent months due to a supply overhang caused in part by the end of a trading play, which led to storage of millions of barrels of crude oil on tankers at sea.
"In 2011, tanker oversupply will continue to be the most dominant factor in rate formation. This state of oversupply will be made all the worse should there be widespread and irreplaceable oil supply disruption. There will be fewer cargoes to carry, prices will rise, and demand destruction will be put in train," HSBC said in a report.
"Despite global oil demand recovering strongly, the impact of new deliveries is depressing rates."
Average earnings have fallen this month below the operating cost level of a VLCC, which is estimated at around $10,000 a day.
"Decent VLCC activity to start the week yesterday, but rates remain below the W50 mark," Arctic Securities said.
Cross-Mediterranean aframax tanker rates fell to W98.96 from W102.50 last Tuesday. Aframax vessels on the Med route, which transport the majority of Libya's crude oil, normally carry up to 600,000 barrels.
Last month aframax rates jumped to their highest this year as buyers scrambled to get cargoes from Libya. But a subsequent drop in activity has added to tanker availability, weighing on rates.
Rates for suezmax tankers on the Black Sea to Med route rose to W100.19 from W82.62 last Monday. Brokers said a boost of activity had driven gains in recent days.