Mideast crude tanker rates edge up
Crude oil tanker earnings on the major Middle East route edged higher on Monday in light business with a growing vessel glut keeping a lid on rate moves higher, Reuters reports.The world's benchmark VLCC export route from the Middle East Gulf to Japan DFRT-ME-JAP reached W53.63 in the worldscale measure of freight rates or $16,390 a day when translated into average earnings, from W53.37 or $15,625 on Friday and W66.00 or $33,845 last Monday.
"VLCCs are crashing down after the party over the past four weeks," said Arctic Securities analyst Erik Nikolai Stavseth. "Asian crude buyers are said to see a number of unsold cargoes in Asia which is likely to keep rates at bay."
A rush of fixings earlier this month from Saudi Arabia to the United States, together with buoyant Asian demand, had bolstered sentiment as buyers sought to ensure stable supplies given growing fears of disruptions due to the tensions with major oil producer Iran.
Earlier this month earnings reached their highest in a year at more than $41,000 a day fuelled by the cargo rally.
RS Platou Markets said rates nearly $50,000 day were not sustainable.
"The extra oil produced in the last few months has been for stockpiling and not for consumption," it said. "The weak global economic growth and the lack of incentives to build higher commercial oil stocks will probably lead to lower OPEC output."
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.
Average VLCC earnings have been volatile in recent months, falling below the $10,000 a day level a number of times. They have stayed above $10,000 a day since Feb. 15.
VLCC rates from the Gulf to the United States DFRT-ME-USG were at W38.61 from W38.71 on Friday and W42.39 last Monday.
Tanker players said the outlook still remained challenging, with downside risks for the sector given worries about the global economy and the fact that more tankers, ordered when times were good, were still to hit the global fleet.
High bunker fuel costs were also eating into earnings.
"Q2 normally represents the seasonal low in tanker demand as Asian refiners undergo maintenance,"RS Platou Markets said.
"Last week's downturn may indicate that the unexpectedly strong rally in VLCC rates has come to an end as the strong drive to build oil inventories may be cresting as oil availability is improving."
Cross-Mediterranean aframax tanker rates were at W101.95 or $13,086 a day on Monday, compared with W97.50 or $10,356 a day on Friday and W87.55 or $4,418 a day last Monday.
Brokers said a pick up in cargo bookings late last week had help push rates higher.
"At present, there is still upward momentum, but with a few quiet days this could quickly disappear," Braemar Seascope said.
Rates for suezmax tankers on the Black Sea to Med route reached W63.38 or $980 a day from W64.11 or $1,445 a day on Friday and W70.08 or $6,332 a day last Monday.
"VLCCs are crashing down after the party over the past four weeks," said Arctic Securities analyst Erik Nikolai Stavseth. "Asian crude buyers are said to see a number of unsold cargoes in Asia which is likely to keep rates at bay."
A rush of fixings earlier this month from Saudi Arabia to the United States, together with buoyant Asian demand, had bolstered sentiment as buyers sought to ensure stable supplies given growing fears of disruptions due to the tensions with major oil producer Iran.
Earlier this month earnings reached their highest in a year at more than $41,000 a day fuelled by the cargo rally.
RS Platou Markets said rates nearly $50,000 day were not sustainable.
"The extra oil produced in the last few months has been for stockpiling and not for consumption," it said. "The weak global economic growth and the lack of incentives to build higher commercial oil stocks will probably lead to lower OPEC output."
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.
Average VLCC earnings have been volatile in recent months, falling below the $10,000 a day level a number of times. They have stayed above $10,000 a day since Feb. 15.
VLCC rates from the Gulf to the United States DFRT-ME-USG were at W38.61 from W38.71 on Friday and W42.39 last Monday.
Tanker players said the outlook still remained challenging, with downside risks for the sector given worries about the global economy and the fact that more tankers, ordered when times were good, were still to hit the global fleet.
High bunker fuel costs were also eating into earnings.
"Q2 normally represents the seasonal low in tanker demand as Asian refiners undergo maintenance,"RS Platou Markets said.
"Last week's downturn may indicate that the unexpectedly strong rally in VLCC rates has come to an end as the strong drive to build oil inventories may be cresting as oil availability is improving."
Cross-Mediterranean aframax tanker rates were at W101.95 or $13,086 a day on Monday, compared with W97.50 or $10,356 a day on Friday and W87.55 or $4,418 a day last Monday.
Brokers said a pick up in cargo bookings late last week had help push rates higher.
"At present, there is still upward momentum, but with a few quiet days this could quickly disappear," Braemar Seascope said.
Rates for suezmax tankers on the Black Sea to Med route reached W63.38 or $980 a day from W64.11 or $1,445 a day on Friday and W70.08 or $6,332 a day last Monday.