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Tue 27 Jul 2010 02:34 AM

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Arabian Gulf tanker rates end losing streak

Rates are kept under pressure due to there being too many ships for hire.

Arabian Gulf tanker rates end losing streak
RISING COST: The cost of delivering Middle Eastern oil to Asia rose for the first time in seven sessions. (Getty Images)

The cost of delivering Middle East crude oil to Asia, the world’s busiest route for supertankers, rose for the first time in seven sessions as fewer vessels competed to haul cargoes.

Charter rates for very large crude carriers, or VLCCs, shipping Saudi Arabian crude to Japan on the industry’s benchmark route climbed 1.5 percent to 55.91 Worldscale points today, according to the London based Baltic Exchange. Returns from the route advanced 1.1 percent to $16,571 daily.

The supply of vessels shrank over the past two trading days, Imarex ASA, an Oslo based freight derivatives broker, said in an emailed report today.

Still, there are too many ships for hire, keeping rates “under pressure,” it said.

Ship supply is a “major headache” for owners as newly constructed vessels compete with tankers that are no longer storing cargoes at sea, SSY Futures Ltd, a unit of the world’s second largest shipbroker, said in an emailed report.

Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes.

Flat rates for every voyage, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.

Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.

The Baltic Dirty Tanker Index, a wider measure of crude oil tanker rates, declined 2 points, or 0.2 percent, to 859 points, according to the exchange.

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