Asia freight rates for very large crude carriers (VLCCs) loading from the Middle East were stable to levels seen the previous week, but demand from this region is expected to lift rates off near four- year lows.
Rates for VLCCs on the benchmark Middle East Gulf-to-Japan route were flat to week-ago levels, with the route pegged at W60 steady to Tuesday's Baltic Exchange settlement.
But shipbrokers see anticipated increased demand from North Asia as a catalyst for a rebound in flagging freight rates.
Fast rising bunker prices continue to be a concern for shipowners, and are likely to see them keep their offers high.
'At the moment, based on a combination of factors, we could see possibly freight going upwards to about W70 levels on this route towards the second half of November,' a Singapore-based shipbroker said.
Japanese crude oil inventories jumped 6.9 per cent to 104.69 million barrels last week, after hitting their lowest level since early 2006 in the week to Oct 26, government data showed yesterday.
Despite the marginal recovery, crude inventories in Japan remain relatively tight amid signs that global oil stocks continue to ease ahead of peak winter oil demand.
Mounting concerns over supply availabilities in the Northern hemisphere have seen US crude futures climbing nearly 8 per cent over the past two weeks.
'We expect to see demand pick up because of these low stock levels, and it is also the time of year when refiners process more crude to meet demand for heating oil,' a shipbroker said.
Earlier this week, Saudi Arabia lowered its official selling price for crude to its customers globally, which could be a sign it was trying to make oil cheaper for buyers.
Last week, VLCC bookings globally jumped 9.5 per cent to 46, while bookings to Japan rose to seven bookings from just one seen in the week to Oct 29.
Overall VLCC bookings to Asia rose more than 55 per cent to 28.
Rising bunker prices are also expected to see shipowners keep their offers at high levels, as they try to recoup vessel operation costs.
Transport fuel is contributing to at least 60 per cent of operation costs, a jump of more than 20 per cent since oil prices started to climb.
On Tuesday, 380-cst bunker prices were valued at US$492 a tonne, but traders said that with crude futures trading around US$98, it was likely that marine fuel prices will be surpass US$500 before the end of the day.
'At this price level, shipowners will have no choice but to keep raising their offers, and will likely be reluctant to do any business at any level below W70 levels,' a shipbroker said.
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