Tuesday, 29 June 2010 at 16:33, Bloomberg
The supply of supertankers competing for 2 million-barrel cargoes of Middle East crude jumped to a surplus as demand for the carriers weakened.
There are 20 per cent more very large crude carriers, or VLCCs, for hire in the Arabian Gulf over the next 30 days than there are cargoes, according to the median estimate of seven owners and brokers surveyed by Bloomberg News today. Two weeks ago, supply equaled demand.
Returns from the Saudi Arabia to Japan route, the industry’s benchmark voyage, have dropped for eight straight sessions, according to the exchange. Yesterday, they plunged 15 per cent to $42,536 a day, about $11,400 more than Frontline Ltd., the largest operator of the ships, said May 21 it needs to break even on them.
The decline in earnings yesterday “is likely to be a stop on the way further down,” Arctic Securities analysts Martin Sommerseth Jaer and Erik Nikolai Stavseth said in an e-mailed report today. “Owners have nowhere to hide” because of the oversupply of vessels, they said.
Clarkson Research Services Ltd., a unit of the world’s largest shipbroker, yesterday raised its forecast for tanker demand, reflecting changes to both historical and forecast demand data from the International Energy Agency.
It forecast that tanker demand as measured by carrying capacity will rise 3.1 per cent to 250.3 million deadweight tonnes this year. Last month, it said there would be a 2.3 per cent expansion to 251.7 million tonnes.
The tanker market is beginning to benefit from a recovery in global economic growth, Morgan Stanley said in a report.
Shipping executives are “optimistic on a concurrent recovery in global oil consumption, driven by continued appetite from the Far East,” Morgan Stanley analyst Ole Slorer wrote in a report dated yesterday.
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