By Jonathan Saul
LONDON, April 29 (Reuters) - Crude oil tanker earnings on the major Middle East route stayed weak on Monday as slower bookings and a glut of available vessels took their toll.
The world's benchmark VLCC export route from the Middle East Gulf (MEG) to Japan
That compared with W32.02 or -$941 a day on Friday and W32.06 or -$714 a day last Monday.
"Fixings last week turned out fewer than the week before, with 26 fixtures which was lower than expectations, especially with the Japanese Golden Week and Chinese May Day holidays this week," broker Marex Spectron said, adding that the four-week supply had risen to 92 vessels available for hire.
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.
Even while average earnings have slid to negative levels in recent months and reached 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.
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.
"We still expect capacity expansion to finally fall short of tonne-mile demand growth in 2014, with newbuild orders drying up for most asset classes," Evercore Partners said.
"But it is important to note that the multi-year overcapacity that has accumulated since 2008 will take several years of demand growth outpacing supply before rates can return to profitable levels on a sustainable basis."
Tanker owners have also faced higher fuel costs, which have eaten into earnings.
"The weak market conditions for crude tankers will likely persist for much of 2013, in our view," Clarkson Capital Markets said.
"Freight rates should slowly improve year-on-year. Watch for some improvement in 2014. Our outlook calls for a gradual tightening of the crude tanker market. Our updated supply/demand model calls for crude tanker supply growth to exceed demand growth through 2014."
VLCC rates from the Gulf to the United States
Rates for suezmax tankers on the Black Sea to Med route reached W65.00 or $12,467 a day.
That compared with W66.00 or $13,567 a day on Friday and W74.38 or $21,508 a day last Monday.
Brokers said there had been firm bookings in the early part of last week before activity tailed off.
(editing by Jane Baird)
((jonathan.saul@thomsonreuters.com)(+ 44 207 542 4357)(Reuters Messaging: jonathan.saul.thomsonreuters.com@reuters.net))
Keywords: SHIPPING TANKERS/CRUDE
