Monday, June 25, 2007

Persian Gulf Tanker Rates May Fall for Sixth Day

Persian Gulf Tanker Rates May Fall for Sixth Day on Ship Glut
By Alaric Nightingale
June 25 (Bloomberg)

The cost of hiring supertankers to transport Middle East crude oil on the busiest shipping route to Asia, which fell every day last week, may extend its decline as demand for July cargoes fails to cut an oversupply of vessels.

Refineries still need to hire about 60 percent of the vessels they need to ship cargoes from Persian Gulf ports next month. A glut of carriers ``appears to be keeping a cap on things at the moment,'' said Simon Chattrabhuti, an analyst at London-based shipbroker Galbraith's Ltd., in an e-mailed note.

Demand has so far failed to emerge for this week, Chattrabhuti said, adding that rental rates are ``maybe a bit softer so far.'' Ship brokers normally spend the first working day of the week producing so-called position lists that show the locations of oil tankers and when they will next be available for hire. The state of supply and demand usually becomes clearer the following day.

SK Corp., South Korea's biggest refiner, hired the carrier Front Highness at a rate of 62.5 Worldscale points, according to a report from Paris-based Barry Rogliano Salles. That's 7 percent below the London-based Baltic Exchange's June 22 benchmark assessment of 67.22 points.

Forty-five tankers have been hired already to load in July, compared with an average of 106 bookings a month last year, according to Barry Rogliano. There are 103 tankers available for hire up to July 25, the broker said in a report today.

At 67.22 Worldscale points, owners of modern very large crude carriers, or VLCCs, can earn about $38,830 a day on a 38- day round trip from Saudi Arabia to South Korea, based on a formula by R.S. Platou, an Oslo-based shipbroker, and Bloomberg bunker prices.

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