Rates Steady Despite Strong VLCC Demand
Strong demand for VLCC tankers in the Middle East failed to create a massive breakout in rates, but owners were happy as bunker fuel prices continued to fall, brokers said early last week.
Expectations that a lack of modern tonnage would hike rates for mid-April oil major-approved vessels failed to come true.
An Exxon cargo for Singapore lifting from three Mideast ports finally got done at the going rate of W77.5 (about $5.00 per ton) after early week offers of W100 had excited dreams W87.5 ($5.50) could be achieved.
Other eastern rates held ground or crept up with the average for Japan W77.5 ($8.50 per ton) and W75 ($7.00) for South Korea. Western prices also inched up to around W65 ($11.25 per ton) for the U.S. Gulf while Red Sea fixtures achieved W72.5-75.
Falling bunker prices - now around $25 a ton down on last week at $150 in Fujairah - meant owners returns improved though, brokers said.
Eyes were now turned towards the outcome of OPEC's meeting in Vienna on relaxing oil output restraints
. Brokers forecast that increased exports would cause VLCC rates to climb in April.
One broker's analyst saw W82.5 ($9.00 per ton) to Japan before rates eased off again toward the summer to around W60-65 ($6.50-7.00).
However, another forecast the opposite - saying that demand for restocking would not come through until oil prices dropped. "VLCC rates may go to W80 for a fortnight before dropping back until the end of the second quarter when
they will start pulling up again," he said. Summer holiday demand for aviation fuel and gasoline in the U.S. and Europe in the driving season plus a need to start restocking before winter would impact shipping rates in the third quarter, he said.
VLCC availability in April remains fairly tight, broker E.A. Gibson said in a weekly report. It saw 54 vessels of 15.25 million tons in the Middle East over the next month, including 26 modern VLCCs. - (Reuters)