Supertanker rates may jump 75%: broker

Tuesday, 02 February 2010

The cost to move crude oil from the Arabian Gulf to the U.S. Gulf Coast using supertankers may jump 75 percent this year as the fleet declines, according to shipbroker Charles R. Weber Co. Rates on the voyage for very-large crude carriers, or VLCCs, will rise to an average US$21,000 a day from last year's US$12,000, according to Weber, based in Greenwich, Connecticut.The broker said 71 new VLCCs are scheduled to be delivered this year and 75 older ships will be scrapped. There are currently 540 VLCCs in service, according to Weber."The lower level of fleet growth seen on VLCCs will likely help to support rates this year," said George Los, an analyst at Weber. An expanding fleet of medium-sized tankers "is undoubtedly going to cap any gains" in rates for those ships.The number of medium-range tankers, which are used to ship gasoline to the U.S. from the Caribbean and Europe, is projected to rise 11 percent to 1,379 this year from 1,246 in 2009, according to Weber.Rates to use the smaller tankers in the Caribbean market may average US$6,750 a day this year, up 8 percent from US$6,250 a day in 2009, according to Weber.VLCCs, which are primarily used to move crude oil, can carry more than 1.46 million barrels of oil. Medium-range tankers can carry 340,000 to 467,500 barrels of gasoline.Rate increaseVLCC rates for shipments to the U.S. Gulf Coast from the Arabian Gulf stood at Worldscale 70 yesterday, or about US$44,000 a day after fuel costs, according to data from New York-based shipbroker Poten & Partners. The rate fell 69 percent last year from 2008 to an average WS 29.41 as oil demand dropped during the worst global recession since World War II.Worldscale points are a percentage of a nominal rate, or flat rate, published by the Worldscale Association in London.Tanker rates got a boost earlier this month as cold weather delayed shipments and raised demand for heating oil. The rally was "just a seasonal strengthening," Jonathan Chappell, an analyst at JPMorgan Chase & Co., said in a report Jan. 22. Prices are "expected to ease substantially through the spring and summer."Weber estimates a 9.6 percent increase in the fleet of Suezmax tankers, which can carry 876,000 to 1.46 million barrels of crude. The broker said 54 new Suezmax tankers are expected to be delivered this year and 16 may be scrapped.

Source: Bloomberg