Frontline Ltd. Message Board

Wednesday, 19 June 2013 | 00:00
U.S. commercial crude oil stocks are expected to have declined 1 million barrels for the reporting week ended June 14, according to a Platts analysis and survey of oil analysts.
The U.S. Energy Information Administration (EIA) is scheduled to release its weekly data at 10:30 a.m. EDT (1430 GMT) Wednesday.
The expected decline is more than double seasonal norms, as the EIA five-year average shows U.S. crude oil stocks typically fall around 400,000 barrels during this reporting period.
Analysts expect the stock draw to be supported through a reduction in crude oil imports. Weekly import volumes have been volatile lately and were 7.850 million barrels per day (b/d) for the reporting week ended June 7. That is up from 7.268 million b/d for the week ended May 31, but down from 8.13 million b/d as recently as May 17.
"It was nice while it lasted," Oil Outlooks President Carl Larry said of higher import numbers. "But it's just not going to stay [this way] for the rest of summer."
Larry expects crude oil stocks to have declined 2.25 million barrels the week ended June 14.
"Firstly, if Motiva can't pull barrels from the Saudis because it's not working consistently, well then we can just move on," he said. "There are barrels coming up from the Middle East, but they are minimal barrels headed to the East Coast and are replacing West African barrels.
Citi Futures Perspectives energy analyst Tim Evans also expects U.S. crude oil imports to decline. Evans sees imports down around 300,000 b/d, supporting a stock draw of between 1 million-2 million barrels.
Meanwhile, refinery runs are expected to have increased by 1 percentage point.
Source; Platts

Wednesday, 19 June 2013 | 00:00
The surplus of tankers competing to ship 2 million-barrel oil cargoes from ports in the Persian Gulf fell to a two-week low, according to a Bloomberg News survey.
There are 15 percent more very large crude carriers seeking charters over the next 30 days than probable shipments from the world’s largest cargo-loading region, the median in the survey of four shipbrokers and two owners showed today. The glut was the lowest since June 4 and compared with 18 percent last week.
The VLCC fleet’s capacity expanded 39 percent in the past five years, according to data from IHS Fairplay, a Redhill, England-based maritime-research company. Seaborne crude-oil imports will average 38.4 million barrels a day this year, 0.5 percent more than in 2008, according to Clarkson Plc, the world’s largest shipbroker.
Freight rates for VLCCs on the benchmark route to Asia from the Middle East slumped 1.4 percent yesterday to 41.75 industry-standard Worldscale points, according to figures from the Baltic Exchange in London. That equated to daily earnings of $15,016, the lowest since June 12, the data showed.
Source: Bloomberg

Jun 17, 2013 4:01 PM PT
China’s oil imports are contracting for the first time since 2009, reducing the biggest source of demand for crude tankers at a time when U.S. purchases are slowing and owners face the worst capacity glut in three decades.
The world’s second-biggest economy bought 2.1 percent less crude in the first five months, compared with an 11 percent expansion in the same period in 2012, customs data show. Tanker owners are already losing money and freight swaps indicate rates won’t be profitable before 2015. Shares of Frontline Ltd. (FRO), the shipping company led by billionaire John Fredriksen, will retreat 38 percent in the next 12 months, according to the average of 14 analyst estimates compiled by Bloomberg.
The World Bank cut its forecast for the global economy on June 12, citing weaker growth in China, which accounts for about 15 percent of demand for seaborne crude cargoes. Shipments to the U.S., the second-largest importer, will drop 10 percent this year as domestic output expands, shipbroker Clarkson Plc estimates. The glut of very large crude carriers, each hauling 2 million barrels, is the biggest since 1985, according to Fearnley Consultants A/S, an Oslo-based research company.
Source; Bloomberg

Tuesday, 18 June 2013 | 00:00
Charter costs for the biggest tankers hauling Middle East oil to Asia fell amid speculation demand to hire ships slowed. Booking rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage slid 1.4 percent to 41.75 industry-standard Worldscale points, the lowest since June 12, figures from the London-based Baltic Exchange showed today. Each of the ships can hold 2 million barrels of oil.
Hire costs remained above 40 Worldscale points even as demand to book tankers got off to a “slow start,” said Halvor Ellefsen, a shipbroker at Galbraith’s Ltd. in London. The VLCC fleet’s carrying capacity will expand 5.1 percent this year, near demand growth of 5 percent, according to Clarkson Plc, the world’s largest shipbroker.
“Charterers got the dates for July loadings today,” Odysseas Valatsas, chartering manager at Dynacom Tankers Management Ltd., an Athens-based operator of the vessels, said by e-mail today. “They are moving slowly at the moment, in order to create momentum.”
Daily earnings for VLCCs on the benchmark voyage fell 8.9 percent to $15,016 according to the exchange. Its assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s biggest expense.
The Worldscale system is a method for pricing oil cargoes on thousands of trade routes. Each individual voyage’s flat rate, expressed in dollars a ton, is set once a year. Today’s level means hire costs on the benchmark route are 41.75 percent of the nominal Worldscale rate for that voyage.
The biggest one-day change for ships hauling crude was for tankers shipping cargoes across the Mediterranean, which gained 2 percent to 77.25 Worldscale points. For vessels shipping refined fuels, the largest move was for tankers heading to the U.S. Atlantic Coast from the Caribbean, which added 1.4 percent to 129.25 points, according to the exchange.
Source: Bloomberg

Monday, 17 June 2013 | 00:00
Charter costs for the biggest tankers hauling Middle East oil to Asia rose for a second day, erasing this week’s drop, amid speculation more cargoes for loading in July will become available next week.
Hire rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage added 0.4 percent to 42.34 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That compared with 42.28 points a week ago. Each of the ships can hold 2 million barrels of crude.
Daily earnings for VLCCs on the benchmark journey also climbed for a second day and reached $16,478, up 12 percent from June 12, according to data from the exchange. The ships needed to earn about $10,780 a day to cover running costs including crew, insurance and repairs in 2011, according to the most recent assessment of industry expenses by Moore Stephens LLP, a London-based accountant.
“Surplus tonnage that remains for June dates is in a good position when charterers concentrate next week on covering their early July positions,” London-based E.A. Gibson Shipbrokers Ltd. said in an e-mailed report. “Owners were able to recover some lost ground by the end of the week.”
The exchange’s earnings assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s biggest expense. The price of fuel, or bunkers, reached an 11-month low today at $595.71 a metric ton, data compiled by Bloomberg from 25 ports showed.
The biggest one-day change for ships hauling crude was for 80,000-ton cargoes to the U.S. Gulf Coast from the Caribbean, down 9.8 percent to 85.91 Worldscale points. For vessels shipping refined fuels, the largest move was for tankers heading to Europe from the Gulf Coast, which added 1.6 percent to 91.07 points, bourse data showed.
Source: Bloomberg

Wednesday, 12 June 2013 | 13:30
World trade in crude oil shrank the most last quarter since the global recession, leading to lower earnings for tankers and stunting the industry’s recovery, according to RS Platou Markets AS.
Global imports slumped 4 percent compared with a year earlier as shipments declined to the U.S. and China, the biggest buyers, the Oslo-based investment bank said in an e-mailed report. Rates for the largest tankers, known as VLCCs, will average $15,000 a day this year, down from a previous estimate of $20,000, according to the report.
Surging production in the U.S. cut imports by 20 percent, and the cargoes aren’t going to other countries as high prices curb demand, Platou said in the report. Imports to China, the main source of demand growth, slid 2 percent, Platou estimated. Next year will be little changed and the market will start to recover in 2015 as fleet growth slows, according to the report.
“High-cost oil production in the U.S. is surging, squeezing out seaborne imports, which in turn have nowhere else to go because high prices are also contributing to keeping oil demand growth tepid,” Ole-Rikard Hammer, head of research at RS Platou Economic Research, said in the report. “VLCCs have taken the main beating, given their exposure to long-haul trades to both the U.S. and China.”
Source: Bloomberg

Tuesday, 11 June 2013 | 00:00
Charter costs for the biggest oil tankers hauling Middle East crude to Asia fell for a sixth day as the supply of vessels in the Persian Gulf expanded.
Rates for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage declined 0.5 percent to 42.06 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That’s the lowest since May 28, according to data compiled by Bloomberg.
There are 76 of the tankers available over the next 30 days, compared with 58 a week ago, according to data from Marex Spectron Group. The VLCC fleet’s carrying capacity will expand 5.1 percent this year, near demand growth of 5 percent, according to Clarkson Plc (CKN), the world’s largest shipbroker.
“The number of VLCCs available in the Persian Gulf is steadily increasing,” Erik Nikolai Stavseth, an analyst at Arctic Securities ASA in Oslo, said in an e-mailed report today. It’s “a situation that we think will have a negative effect on freight rates.”
Daily earnings for VLCCs on the benchmark voyage to Asia slipped 1.3 percent to $16,282 today, exchange data showed. Today’s level means hire costs on the benchmark route are 42.06 percent of the nominal Worldscale rate for that voyage.
Dirty Index
The Baltic Dirty Tanker Index, a broader measure of oil-shipping costs that includes vessels smaller than VLCCs, increased 0.2 percent to 603, according to the exchange.
The biggest one-day change for ships hauling crude was for tankers heading to northwest Europe from the Baltic Sea, which added 8.7 percent to 65.70 Worldscale points. There were an increased number of fuel oil and crude cargoes for loading in June and that curbed vessel supply, according to Halvor Ellefsen.
For vessels shipping refined oil-products, the largest move was for tankers heading to northwest Europe from the U.S. Gulf Coast, which slipped 1.3 percent to 83.93 points, according to the exchange.
Source: Bloomberg

Saturday, 08 June 2013 | 00:00
Charter rates for the largest oil tankers hauling Middle East crude to Asia slid the most since January this week as the supply of cargoes declined.
Hire costs for very large crude carriers on the benchmark Saudi Arabia-to-Japan voyage lost 0.4 percent to 42.28 industry-standard Worldscale points, figures from the London-based Baltic Exchange showed today. That rounded out a 9.4 percent weekly decrease, the biggest since the week ended Jan. 25, the data show.

A “couple more” cargoes became available for loading in the Persian Gulf in June amid “dull activity,” Marex Spectron Group said in an e-mailed report. Charterers are waiting for freight rates to fall before booking more ships, according to London-based shipbroker Braemar Seascope Ltd. Hire costs jumped 40 percent last month.
“Rather than the continued stampede of cargoes of the previous weeks, charterers held back and relaxed,” Braemar said in a report. Charterers “replaced late-running ships fixed under duress last week and tried to wrest control back from the shipowners.”
Daily earnings for VLCCs on the benchmark voyage added 3.3 percent to $16,491, this week’s first increase, according to the exchange. Its assessments don’t account for owners’ efforts to improve returns by securing cargoes for return-leg voyages or reducing speed to burn less fuel, the industry’s main expense.
Today’s level means hire costs on the benchmark route are 42.28 percent of the nominal Worldscale rate for that voyage.
The biggest one-day change for ships hauling crude was for tankers heading to the U.S. Gulf Coast from the Caribbean, which fell 2.6 percent to 109.77 Worldscale points. For vessels shipping refined fuels, the largest move was for tankers heading to Japan from Saudi Arabia, which climbed 1.9 percent to 98.92 points, according to the exchange.
Source: Bloomberg