as Oil Prices Fall
February 19, 2015
Tanker Glut Signals 25% Slump In Freight Rates This Year
Oil tankers are anchored near the Port of Long Beach, California.
Photographer: Tim Rue/Bloomberg
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(Bloomberg) — The world’s supertankers are sailing at the fastest speeds in 2 1/2 years as a collapse in crude oil prices spurs demand for cargoes and drives up daily returns owners can make from deliveries.
Very large crude carriers, each about 1,000-feet long and able to transport 2 million barrels of oil, sailed at an average of 12.57 knots this month, according to data from RS Platou Economic Research, an Oslo-based firm. The fleet, whose steel weight is about 27 million metric tons, last moved that fast in August 2012.
Tanker rates have surged amid signals that China accelerated purchases of crude to fill its stockpiles after Brent crude, the global benchmark, collapsed last year. Prices plunged in part because the Organization of Petroleum Exporting Countries pledged to keep pumping oil amid a global oversupply. The ships earned an average of more than $71,000 a day since the start of January, the best start to a year in Baltic Exchange data that begin in mid-2008.
“Freight rates are high because there’s a lot of oil trade at the moment,” Frode Moerkedal, an Oslo-based analyst at Platou Markets, an investment adviser linked to the research company, said by phone on Thursday. “OPEC has refused to cut production so there’s more oil being shipped.”
VLCC speeds from 14-to-16 Feb. were 6.7 percent higher than 14-to-16 Nov., according to Platou. The speed for the ships when voyaging without cargoes rose 10 percent over the same period to 13.31 knots.
The daily average rate to hire a VLCC on the benchmark Middle East-to-East Asia route was $71,772 so far in the first quarter, compared with an average of $47,614 in the fourth quarter, according to Baltic Exchange data.
VesselsValue Ltd., a London-based firm that provides shipping data, also estimates VLCCs are sailing at the fastest since 2012. The acceleration is in part because falling oil prices have cut fuel costs and made it more profitable for owners to transport cargoes, said Kaizad Doctor, analytics director. Ship fuel is known as bunker.
“This can be attributed to the simultaneous decrease in the oil prices and the consequent reduction in bunker prices but also due to the increase in rates caused by the Chinese re-stocking cut-price crude,” Doctor said.
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