Caribbean Tanker Rates Reach One-Year High on Weather, Imports

Monday, 18 January 2010 12:02

The cost to ship crude oil from the Caribbean to the U.S. Gulf Coast rose to a one-year high this week as cold weather delayed shipments and imports increased.

Tankers that can carry about 600,000 barrels of oil were hired for an average of Worldscale 215 on Jan. 13, the highest level since Dec. 31, 2008, according to London-based broker Galbraith s. Rates have climbed in seven of 10 trading days this year.

Inclement weather has created port delays and subsequent congestion, Alex Ziemba, a New-York-based analyst at shipbrokers Poten & Partners Inc., said in an e-mail. This, in conjunction with a recent rise in U.S. crude oil and refined- product imports, has helped to buoy up rates.

Oil imports to the Gulf Coast region rose to 5.31 million barrels a day in the week ended Jan. 8, up 11 percent from a week earlier and the highest level since the week ended Sept. 25, an Energy Department report on Jan. 13 showed.

U.S. crude imports increased to 8.9 million barrels a day last week, up from a 15-month low of 7.71 million barrels a day in the week ended Dec. 18, the report showed.

The Energy Department projects that U.S. oil consumption will advance by about 220,000 barrels a day in 2010, the first increase in three years, because of a moderate economic recovery that began late in 2009, according to the department s Short Term Energy Outlook, released Jan. 12.

Oil Demand

Higher demand may boost oil shipments into the U.S., which imports about two-thirds of its crude. About 60 percent of the imports go to the Gulf Coast.

Rising imports and shipping rates may benefit tanker owners including Teekay Corp. and Overseas Shipholding Group Inc.

Shares of Teekay have jumped 8.9% this year and Overseas Shipholding has risen 12 percent.

Tanker rates covering oil shipments to the Gulf Coast from the Arabian Gulf, West Africa and the east coast of Mexico have risen to their highest level in at least a year, according to data compiled by Bloomberg and London-based shipbroker Galbraith s.

Shipments of European gasoline to the U.S. also jumped this month, according to data from Clarkson Research Services Ltd.

Rates to ship gasoline from Europe to the U.S. rose to 245 Worldscale on Jan. 7, the highest level since Oct. 31, 2008, according to Poten data.

Worldscale points are a percentage of a nominal rate, or flat rate, for tanker shipments on various routes. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing costs.

Courtesy : Business Recorder