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LONDON, Oct 21 (Reuters) – Crude oil tanker earnings on the major Middle East route stayed firm on Monday helped by positive sentiment and higher bookings in recent days.
The world’s benchmark VLCC export route from the Middle East Gulf (MEG) to Japan DFRT-ME-JAP reached W41.33 in the worldscale measure of freight rates, or $13,685 a day when translated into average earnings and at their highest since late July.
That compared with W41.00 or $13,003 a day on Friday and W37.57 or $7,112 a day last Monday.
Omar Nokta of Global Hunter Securities said about 40 VLCCs were fixed last week on the spot market, with 30 headed to Asia and 10 to either the United States or Canada. That compared with a average of 25 weekly bookings since early June.
“If rates hold at $25,000/day for the rest of this year, VLCCs will have averaged just $13,000/day for 2013 – the worst average since the mid-1980s and compares to the $39,500/day average since 1990,” Nokta said.
“It is interesting to note that rates are beginning to push upwards at this point in the calendar as VLCC activity has typically began to ramp up for winter trading around the mid-November timeframe.”
Operating costs levels were estimated around $10,000 to $11,000 a day for VLCCs.
In July earnings rose to their highest in over seven months, lifted by stronger demand and unrest in Egypt.
“Activity ex the MEG increased last week on higher enquiry levels. More available tonnage in the region might however put some downward pressure on rates this week,” Pareto Securities said on Monday.
VLCC rates from the Gulf to the United States DFRT-ME-USG were at W28.04 on Monday versus W27.88 on Friday and W25.38 last Monday.
Cross-Mediterranean aframax tanker rates were at W75.60, or $3,225 a day, compared with W72.90 or $1,387 on Friday and W67.75 or -$1,544 a day last Monday.
Brokers said a higher exports from Libya after the recent disruptions was expected to provide support to aframaxes. They added that suezmax rates were capped by slower bookings.
Rates for suezmax tankers on the Black Sea to Med route reached W56.04, or $1,374 a day. That compared with W55.17, or $359 a day on Friday and W53.50 or -$960 a day last Monday.
Traders said the market would remain choppy in coming months as more tankers, ordered when times were good, 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. (Editing by David Evans)
(c) 2013 Thomson Reuters, All Rights Reserved
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