Bloomberg Roundup October 13th

Black Sea, Mediterranean Tanker Rates May Rise on Winter Demand
By Alaric Nightingale
Oct. 12 (Bloomberg)

The cost of shipping 80,000-ton cargoes of crude oil from Black Sea and Mediterranean ports to refineries in southern Europe may rise next week as bookings increase before the northern hemisphere winter.

Demand for so-called aframax tankers has been ``busy'' for the past several days, Francesco Sparviero, a broker at Nolarma Tankers SRL in Genoa, said in an e-mailed note today. The extra demand may continue into next week as refineries buy crude to turn into winter fuels such as heating oil, he added.

Increased bookings have cut the number of tankers competing for cargoes and enabled owners to negotiate higher rental rates, Sparviero said. The London-based Baltic Exchange's benchmark rate for shipments across the Mediterranean gained 28 percent to 120.45 Wordscale points in the four days to Oct. 11.

Reduced daylight hours are starting to delay vessels in two Turkish straits that ships exiting and entering the Black Sea must navigate. The average waiting time now is between two and three days going into the Black Sea and about two days to exit, according to Sparviero.

Delays at the two waterways normally rise in winter, reducing the supply of Russian crude to world markets and cutting tanker supply because the ships are unavailable for hire for longer periods.

A rental rate of 120.45 Worldscale points equates to $18,613 a day, according to a formula from Oslo-based shipbroker RS Platou AS and Bloomberg ship-fuel prices. Teekay Shipping Corp., the world's biggest dedicated oil-tanker company and operator of aframaxes, needs about $15,000 a day to break even.

Black Sea, Africa Oil-Tanker Rates May Slump on Surplus Ships
By Alaric Nightingale
Oct. 5 (Bloomberg)

The cost of shipping 1 million-barrel consignments of crude oil from ports in the Black Sea and west Africa may extend two weeks of declines as a surplus of tankers compete for cargoes.

There is a ``long'' list of tankers available to meet ``very little'' demand, Luis Bernar, a tanker broker for Medco Shipbrokers in Madrid, said in an e-mailed note today.

``Everyone is hoping that the last quarter of the year will improve but I'm starting to think this is wishful thinking,'' Bernar said. Rental rates will only improve if there are weather- related delays and cargo demand accelerates, he said.

Rentals from the two ports, the biggest for 1 million-barrel tankers globally, began falling on Sept. 21, with rates from the Black Sea dropping 17 percent and those from west African ports losing 12 percent, according to benchmark data from the London- based Baltic Exchange.

Black Sea hire rates declined to 81.96 points and west African bookings slipped to 82.62 points, according to the most- recent prices from the exchange.

Based on a rental rate of 81.96 Worldscale points, operators of double-hull suezmax vessels earn about $15,508 a day on the 12-day round trip between the Black Sea port of Novorossiisk and Augusta, Italy, according to a formula by R.S. Platou, an Oslo- based shipbroker, and Bloomberg bunker prices.

At 82.62 points, a west African cargo would pay $16,579 a day, according to the same formula.

Frontline Ltd., the world's biggest supertanker operator, said Aug. 22 it needs $22,000 to break even on each of its suezmaxes.