Arab Today, arab today storms ahead for oil tanker rentals
Last Updated : GMT 08:57:25
Arab Today, arab today
Arab Today, arab today

Storms ahead for oil tanker rentals

Arab Today, arab today

Arab Today, arab today Storms ahead for oil tanker rentals

Oslo - Arabstoday

Conflicting predictions for the future performance of the oil tanker trade yesterday have underlined the volatility of the market. DNB Markets, Norway\'s largest investment bank, delivered an upbeat report, raising its rate predictions for this year by 20 per cent. Meanwhile, Sergey Frank, the chief executive of Russia\'s Sovcomflot, a state-backed tanker operator, delivered a grimmer assessment for the year. Analysts at DNB now expect very large crude carriers (VLCCs) to command average daily lease rates of US$27,500 (Dh101,015) this year, up from the $23,000 they had earlier forecast. While they warn that VLCC rates will display significant volatility in the short term, bouncing between $10,000 and $50,000 daily, they say vessel utilisation has reached the all-important 90 per cent level. The daily lease rate will rise to $28,000 next year and $29,000 in 2014, the analysts said in a report published yesterday. However, Sovcomflot believes the outlook for the market is still some way from a rebound. \"Tanker owners are still experiencing challenging times,\" said Mr Frank. \"It is way too early to talk about recovery from this period of long-term market depression. In the first quarter, freight rates remained at historic low levels due to a continued tanker supply demand imbalance.\" Crude tankers accounted for just over 40 per cent of the company\'s time charter revenue, with its products tankers responsible for just over a quarter of its income. The company yesterday reported that in the first three months of this year revenue climbed by 14 per cent to $345.1 million. Tanker lease rates reached their highest level in a year at $45,000 a day in April, but the rally subsequently ran out of steam. Average earnings per day are calculated after a vessel covers its voyage costs such as bunker fuel and port fees. VLCC operating costs, including financial costs, are estimated at about $10,000 a day, but the volatility in earnings has resulted in lease rates falling below that figure several times in recent months. They have, however, stayed above $10,000 a day since February. But concerns over the global economy and the fact that more tankers, ordered when times were good, were still to hit the global fleet, still hang over the sector, according to Intertanko,a tanker owners association. \"The weak global economic conditions with low GDP growth rates in primarily the western economies have lowered demand for tanker tonnage and offset the balance of the freight markets, resulting in low earnings and tough trading conditions,\" said Peter Sand, the chief shipping analyst with the trade association Bimco. From TheNational

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