VLCC Rates Start to Strengthen

According to reports, there are mixed messages being transmitted around the tanker market. The threat of further cuts in crude production by Opec is being brought closer as oil prices fall on world markets. Unseasonal weather conditions still have a lot to do with sentiment and while stock levels remain above average, oil buyers are likely to play a waiting game. Then as oil prices ease down due to the shortage of activity, oil buyers tend to return to the marketplace. But by then freight rates have taken a small dive. But there is hope on the horizon. VLCC rates are starting to strengthen as charterers take a longer view. For instance the 30th December cargo that Chevron fixed on a Tankers International vessel to the US Gulf at Worldscale 60 will not arrive in Louisiana much before February. High pressure There is therefore some anticipation that stock levels will be falling by then. This suspicion is reinforced by the fact that rates for shorter-haul cargoes from West Africa are still weak.

The time to restock from these closer facilities has not yet arrived. Weather conditions in the Far East are unsettled although high pressure now sits over Beijing giving 6C or 7C night-time temperatures under clear skies. But further south the hurricane Durian which hit the Philippines last weekend was most unseasonal.

The typhoon season in the South China Sea is usually between June and September. December is not normal and was an unpleasant surprise. On the clean tanker sector of the market, fluctuating weather conditions in the US have sharply reduced stocks of clean products, bringing about an increase in imports from the Caribbean and from Europe, thus increasing rate levels to attractive levels. Neither of these opposing pressures is encouraging owners to jump into the purchase market for the time being or anyway, until a trend is firmly established.

Where scores of dry cargo vessels are changing hands every week, this is not the case in the tanker sector. The small shuttle tanker, the 1988-built, 39,977dwt Campos Transporter, employed by Petrobras in the offshore industry in Brazil, has been sold to FAL bunker services for a reported $17.5 million. It was purchased by Ugland 18 months ago for $14 million, so there is nothing wrong with taking a profit as the saying goes. But otherwise tanker sales are becoming rare. source: GulfNews