A spike in chartering activity helped push up VLCC rates last week amid suggestions OPEC quotas are not being followed.
Fotis Giannakoulis of Morgan Stanley says VLCC spot earnings out of the Middle East jumped by 12% last week to reach $18,500 per day.
He counts 33 VLCCs finding employment, a 94% week-on-week rise which continues a trend of increased activity during the past month.
“The rising Middle East shipments bring up again the poor compliance of OPEC producers with the announced production cuts that were implemented this year,” he said in a report today.
“Although crude flows have been robust, sentiment among shipowners remains uncertain over the extent of July loadings in the Middle East as no official Basrah stems have been released, while an unofficial programme circulating among brokers suggests that loadings will be at very low levels.”
Short-term floating storage is also influencing the market, with Greg Lewis of Credit-Suisse noting one trader hiring five VLCCs on one to three month storage contracts.
“Storage economics look to be helped by purchasing discounted crude,” he said.
Doug Mavrinac of Jefferies said: “Should crude oil prices remain under pressure over the summer months, crude oil tanker spot charter rates could be stronger than expected with the prospects of floating storage demand providing an elevated floor for spot charter rates.”
According to data from Howe Robinson Partners, VLCC rates sat at $23,938 per day on Friday for modern eco vessels, compared with the $32,881 per day average in the year to date.
