By Jonathan Saul
LONDON, April 24 (Reuters) - Crude oil tanker earnings on the major Middle East route stayed pressured on Wednesday as a surplus of vessels kept rates in their recent range.
The world's benchmark VLCC export route from the Middle East Gulf (MEG) to Japan
That compared with W31.92 or -$637 a day on Tuesday and W31.50 or -$1,780 a day last Wednesday.
"The VLCC market ex MEG remained flat during the past week. charterers continued keeping the market under their control without much resistance from owners," broker Fearnleys said on Wednesday.
"So far we have counted about 35 fixtures done for May. This is about 10 fixtures less compared with April one month ago. Although there was a small reduction in available tonnage for early May more supply seems to be around for middle month giving charterers no worries for increased transportation costs."
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.
"VLCC freight rates remain in the doldrums," said Arctic Securities analyst Erik Nikolai Stavseth.
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.
Tanker owners have also faced higher fuel costs, which have eaten 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 W67.75 or $15,733 a day.
That compared with W74.17 or $21,459 a day on Tuesday and W65.00 or $12,908 a day last Wednesday.
Brokers said firmer demand for suezmaxes in the West Africa market had helped lift Med rates earlier this week, although the gains were beginning to abate.
"Suezmax crude rates are beginning to lose steam in West Africa," Global Hunter Securities said on Wednesday.
(Editing by William Hardy)
((jonathan.saul@thomsonreuters.com)(+ 44 207 542 4357)(Reuters Messaging: jonathan.saul.thomsonreuters.com@reuters.net))
Keywords: SHIPPING TANKERS/CRUDE
