Thursday, October 11, 2007

Bloomberg Roundup October 11th

Asian Aframax Rate Falls on Limited Cargoes, Ship Supply Gain
By Katherine Espina
Oct. 11 (Bloomberg)

Asian rates for oil tankers that can carry 80,000 metric tons fell for a third day on limited cargoes from the Middle East, causing an oversupply of vessels.

The aframax rate for transporting oil from Kuwait to Singapore, the world's fourth-busiest route for such vessels, dropped 0.08 percent to Worldscale 115.83 yesterday, according to data from the London-based Baltic Exchange. Shipping a ton of fuel on the route costs $11.96, according to Bloomberg data.

``There could be some more room for rates to go down given there are plenty of vessels and little activity,'' Takeshi Ando, a shipbroker at Matsui & Co., said by phone from Tokyo.

Aframax rates have declined 7 percent in the past four weeks, as holidays in China slowed chartering and higher fuel oil prices in Fujairah, the Middle East's largest bunker port, discouraged shipments to the Far East.

Only two aframax tankers capable of moving 215,415 tons of fuel are scheduled to arrive in Singapore next week compared with this week's four, which are able to transport 412,305 tons, Bloomberg data showed. About five to 10 aframaxes are waiting for employment in Singapore this week, shipbrokers said.

Rising supply of new vessels may also contribute to declining rates. More than 240 aframax tankers are on order for the next five years, adding to the 728 units at the end of 2006, France-based shipbroker Barry Rogliano Salles said in its review of the tanker market.

Southeast Asia is the world's second-busiest aframax market, after the Mediterranean. The Caribbean is the third busiest.

Other freight rates. Source: Baltic Exchange:

Route Tons Rate Change Carrier
Kuwait-Singapore 80,000 115.83 -0.08% Aframax
Indonesia-Japan 80,000 110.00 -4.35% Aframax
Persian Gulf-Japan 75,000 113.75 +0.92% Oil Product Tanker
Singapore-Japan 30,000 202.00 -0.04% Oil Product Tanker
Middle East-Japan 55,000 161.73 +4.5% Oil Product Tanker

Persian-Gulf Tanker Costs May Resume Decline on Glut of Ships
By Alaric Nightingale
Oct. 11 (Bloomberg)

The cost of shipping Middle East crude to Asia, which advanced for the first time in 10 days yesterday, may resume its decline as a glut of ships will counter increased demand for cargo from Saudi Arabia.

The London-based Baltic Exchange's key ship-rental rate rose as refinery officials said Dahran-based Saudi Aramco will supply Asian customers with full crude-oil volumes for the first time in a year from November. The company previously cut volumes by 9-10 percent. The Organization of Petroleum Exporting Countries has pledged to boost output from next month by 500,000 barrels a day.

``I don't see the market picking up,'' said Mathieu Philippe, a tanker broker in Dubai at Paris-based Barry Rogliano Salles. ``There are plenty of ships around. I don't think these announcements will have any effect for the next few days.''

Fifty-seven tankers that so far haven't been hired are able to reach ports by Oct. 31, according to a Barry Rogliano report, meaning oil-company officials will have a surplus of vessels to use when November bookings get under way.

The Baltic Exchange's rental rate, used in negotiations between shipowners and oil companies and to settle freight hedging contracts, advanced 2.3 percent to 51.64 Worldscale points yesterday, its first gain since Sept. 27.

At 51.64 Worldscale points, owners of double-hulled very large crude carriers, or VLCCs, can earn about $17,662 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 marine fuel oil prices.

Frontline Ltd., the world's biggest VLCC operator, said Aug. 22 it needs $30,000 a day to break even on each of its supertankers.

Caribbean Tanker Rate Rises as U.S. Crude Oil Inventory Falls
By Todd Zeranski
Oct. 11 (Bloomberg)

The rate to transport oil from the Caribbean rose as U.S. oil inventories declined and refineries increased production.

The Caribbean is the world's third-largest Aframax-tanker market after the Mediterranean and Southeast Asia. An Aframax is the most common tanker used to move oil in the region.

The average Aframax rate rose 2.5 points, or 2.5 percent, to Worldscale 102.5. WS 102.5 is equal to about $6,500 a day, after expenses such as fuel and port fees, according to Poten & Partners.

Houston-based broker Lone Star, R.S. Platou reported a rate of WS 105. Poten & Partners reported WS 100.

The rate fell to WS 92.5 on Sept. 11, the lowest since 2001, according to Bloomberg data.

General Maritime Corp., the second-largest U.S. tanker owner behind Overseas Shipholding Group Inc., said last year it had a break-even rate for its fleet of about $15,700 per day. The New York-based company operates many of its vessels in the Caribbean.

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