Cantor Fitzgerald

Cantor Fitzgerald Comments: Mideast Crude Tanker Market Weak, Demand Sluggish

July 12, 2010, Reuters Africa

Crude oil freight rates on major routes were weaker on Monday with growing tanker availability and sluggish demand weighing on the Middle East Gulf market.

The world's benchmark Very Large Crude Carrier (VLCC) export route from the Middle East Gulf to Japan DFRT-ME-JAP was at W50.87 or $12,043 a day, from W64.06 or $27,575 a day last week.

"With an ample tonnage list at the disposal of charterers for the remainder of the month would suggest that we might not yet have seen the bottom just yet," broker E.A. Gibson said in a report.

Middle East VLCC rates rallied in early June, helped by tighter tanker availability and strong demand. But in recent weeks they have continued to fall due to softer enquiry and a growing build up of vessels.

VLCC rates from the Gulf to the United States DFRT-ME-USG were at W41.13 from W45.40.

"With the market currently well-supplied in tonnage terms, we expect rates could stay in the doldrums for a period before balancing the supply-demand to a point where owners can ask for better rates," Arctic Securities said.

Crude oil tanker rates from the Caribbean to the U.S. Gulf were lower with little impact from the oil spill in the Gulf of Mexico. Rates for smaller aframax tankers from the Caribbean to the U.S. Gulf coast were at W161.82 from W168.75 last week.

VLCC rates from West Africa to the U.S. Gulf were at W58.60 from W66.85 last week.

"The VLCC market in West Africa languished as well, as a surplus of suezmax ships were more than ample to meet cargo demand, we suggest," Cantor Fitzgerald said.

Baltic Exchange figures showed crude oil tanker rates from the Black Sea to the Mediterranean were at W81.04 from W81.14 last week.

Cross Mediterranean tanker rates were at W99.55 from W103.50.