* Outlook for tanker market seen staying pressured
* Bunker fuel costs also eating into owner profitability
By Jonathan Saul
LONDON, April 3 (Reuters) - Crude oil tanker earnings on the major Middle East route fell to their lowest in six weeks on Wednesday as the market continued to struggle with a glut of tankers.
The world's benchmark VLCC export route from the Middle East Gulf to Japan
That compared with W32.56 or -$3,012 a day on Tuesday and W34.22 or $547 a day last Wednesday.
"While the VLCC market seemed to point higher towards Easter, the recent data points indicate a slowdown," Arctic Securities analyst Erik Nikolai Stavseth said.
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 around $10,000 a day.
Despite average earnings sliding to negative levels in recent months and reaching a record low of nearly -$8,000 a day, ship owners have continued to hire their tankers out, aiming to keep vessels employed to ensure they are positioned in places where they can pick up further work.
Broker Fearnleys said charterers in recent days had received multiple offers for every new cargo they sought to book.
"Owners on the other hand seemed to be willing to chase market rates further down, and new low levels have again been established," Fearnleys said on Wednesday.
"With a glance at the supply side, charterers have no reason to fear any imminent change in the present trend."
Tanker players said downside risks remained, given modest oil demand and the fact that more tankers, ordered when times were good, are still to join the global fleet this year.
Standard & Poor's said on Wednesday the crude oil tanker market was tackling a moderate supply surplus this year, compounded by soft conditions in the global economy.
"Given the weak demand prospects, we expect time charter rates for crude tankers to continue trending sideways over the next few quarters, likely turning around in late 2013," S&P credit analyst Izabela Listowska said.
"We then forecast a gradual upturn for tankers from 2014 as demand and supply become more balanced, supported by rising tonne-mile demand on changes in trading patterns."
The ratings agency said further shipping company defaults and financial restructurings were likely in the next few quarters.
"Global ship operators are facing significant refinancing and default risks as a result of tight bank funding, enormous industry overcapacity and depressed global trading conditions," Listowska said.
Tanker owners also face high fuel costs, which are eating into earnings.
VLCC average earnings turned negative for the first time in August 2011 since the Baltic Exchange started collating the data in 2008 as worsening conditions took their toll.
VLCC rates from the Gulf to the United States
Rates for suezmax tankers on the Black Sea to Med route reached W67.29 or $13,135 a day.
That compared with W71.00 or $16,697 a day on Tuesday and W74.42 or $20,284 a day last Wednesday.
"The core short-haul (suezmax Med) market is slow and current rate levels are at risk unless charterers resume interest," broker Fearnleys said.
(editing by Jane Baird)
((jonathan.saul@thomsonreuters.com)(+ 44 207 542 4357)(Reuters Messaging: jonathan.saul.thomsonreuters.com@reuters.net))
Keywords: SHIPPING TANKERS/CRUDE
