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Tue 22 Dec 2009 09:29 PM

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Gulf tanker rates decline as year end demand slows

A decrease in the demand of crude has led to a decline in charter rates.

The cost of delivering Middle East crude to Asia, the world’s busiest route for supertankers, fell for a second day as demand wanes before yearend holidays and the supply of ships rises.

According to the London based Baltic Exchange, the charter rates on the industry benchmark Saudi Arabia to Japan route fell by1 percent to 59.02 World scale points.

Returns from the voyage slumped by 1.2 percent to $40,205 a day.

Halvor Ellefsen, a tanker broker at Sea League A/S in Oslo, said: “Demand is winding down for the holidays leaving freight rates little changed.”

Lease rates on the route have jumped 53 percent so far this quarter as members of the Organization of Petroleum Exporting Countries increase output, traders hire more ships to store cargoes, and owners demolish aging carriers that face trading restrictions next year.

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.

Nikos Varvaropoulos, an official at Optima Shipbrokers Ltd in Athens said: “Charter rates will hold during the holidays.”

Returns from suezmax tankers that haul 1 million barrel cargoes added 0.1 percent to $24,940 a day. Aframaxes that deliver 650,000 barrels added 3.5 percent to $27,266 a day.

(Bloomberg)

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