Saturday, February 14, 2009
Persian Gulf Tanker Rates May Extend Advance on Lack of Ships
Saturday, 14 February 2009
The cost of delivering Middle East crude to Asia, the world’s busiest route for supertankers, may gain for a fourth day as the supply of ships becomes constrained by storage deals. Oil companies are storing about 50 million barrels of crude at sea, the International Energy Agency said Feb. 11. They have options to keep 20 to 40 million barrels more, Denis Petropoulos, head of tankers at Braemar Shipping Services Plc, the second- largest publicly traded shipbroker, said yesterday. Vessel supply has become “very thin,” partly because of ships being hired for storage, Per Mansson, managing director of shipbroker Nor Ocean Stockholm AB said. Shipowners may also be withholding vessels in anticipation of higher rates, he said.
The Baltic Exchange’s benchmark price, for shipping Saudi Arabian cargoes to Japan, advanced 12 percent yesterday to 52.19 Worldscale points, taking its gain since Feb. 9 to 35 percent. Forward freight agreements, bets on the future price, closed at 48 Worldscale points for the average of March yesterday, according to data from Oslo-based Imarex ASA.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
A rate of 52.19 points works out at $45,584 a day, according to the Baltic Exchange. Globally the carriers are making $41,779 a day. Frontline Ltd., the largest owner of the vessels, said Nov. 28 it needs $34,700 a day to break even on each of its supertankers, a 10 percent increase compared with Aug. 21.
Source: Alaric Nightingale, Bloomberg
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