By Keith Wallis SINGAPORE, June 23 (Reuters) – Freight rates for very large crude carriers (VLCCs) could creep higher as more ships are chartered for floating storage and crude oil shipments increase ahead of the northern winter, brokers said.
“There might be a slow creep up towards 60 (on the Worldscale measure),” said Ashok Sharma, managing director of ship broker BRS Baxi in Singapore on Friday.
“W60 is at least on the horizon. Rates from West Africa to China are already at W56,” he added.
That came as VLCC rates from the Middle East to Asia gained around 3 Worldscale points since last Thursday, buoyed by growing interest from traders seeking to charter vessels to store oil for one to three months.
“The storage play has gained traction. If oil prices head lower, floating storage will get more traction,” Sharma said.
“If prices go to $20 a barrel it will be great for shipping – good for oil tankers,” Sharma added.
The price of Brent oil has fallen around 20 percent, or $45 a barrel, on the back of plentiful supplies and stuttering demand in Asia. That is the biggest slump in a first half of a year since 1997.
Trafigura has chartered at least five VLCCs, which can each hold around 2 million barrels, for floating storage at hire rates of around $17,000-$17,500 per day, ship brokers said.
They include the 301,438 deadweight tonne (DWT) Ashna, which was chartered by Trafigura on Wednesday for between 30-90 days from around July 3 at a daily hire rate of $17,300, Singapore shipbrokers said.
ST Shipping, the trading arm of Glencore, had earlier been linked to chartering the ship.
“Purchasing spot barrels at a discount to market – which a rebound in excess global crude supply appears to have enabled – can make floating storage plays profitable,” said U.S.-based shipbroker Charles R Weber in a market report last week.
“Applying a discount of $2 per barrel to the spot Brent price yields a potential profit of $3.15/bbl for one month; though the contango structure against escalating storage costs erode profits progressively for longer periods,” the Weber report said.
Around 40 VLCC charters have been fixed to load in the Middle East in July, brokers said.
A further 80-85 cargoes could be fixed to complete the July loading programme.
August could see a pick-up in loading from the Middle East and West Africa after China last week issued a second batch of crude oil import quotas and refineries increase crude shipments ahead of the northern winter, brokers said.
VLCC rates on the Middle East-to-Japan route rose to W52.50 on Thursday up from W49.50 a week earlier.
Rates on the West Africa-to-China route to about W56.25 on Thursday against W55.25 a week earlier.
“Rates are going sideways,” a European shipbroker said on Friday.
Charter rates for an 80,000-dwt Aframax tanker from Southeast Asia to East Coast Australia were around W101.50 on Thursday compared with around W102 last week.
(Reporting by Keith Wallis; ; Editing by Biju Dwarakanath)
Dive into a sea of information with our meticulously curated weekly “Dispatch” email. It’s more than just a newsletter; it’s your personal maritime briefing.
Dive into a sea of information with our meticulously curated weekly “Dispatch” email. It’s more than just a newsletter; it’s your personal maritime briefing.
(Bloomberg) — Russia’s state oil tanker company PJSC Sovcomflot said that US sanctions are putting pressure on its operations, the latest sign that the measures are complicating the delivery of...
March 11 (Reuters) – U.S. crude oil production lead global oil production for a sixth straight year, with a record breaking average production of 12.9 million barrels per day (bpd), the Energy...
BEIJING/MANILA, March 5 (Reuters) – The Philippines summoned China’s deputy chief of mission in Manila on Tuesday to protest what it called “aggressive actions” by Chinese naval forces against a resupply mission...
March 5, 2024
Total Views: 3624
Why Join gCaptain Club?
Be Informed: Stay updated with the latest maritime news and trends.
Connect: Network with a community of maritime professionals and enthusiasts.
Gain Insights: Receive exclusive content and personal perspectives from our CEO.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.