Freight costs for transporting crude oil from the Gulf to Asia firmed on Tuesday and sentiment on voyages from West Africa stayed relatively bullish, brokers said.
They said the benchmark very large crude carrier (VLCC) route from the Gulf to Singapore firmed eight worldscale points to at least W119 ($1.12 a barrel) following a booking for first decade June dates.
Voyages to the United States from the Gulf on similar-sized vessels were little changed at W87.50-W90 and moving sideways, brokers said. Brokers and analysts said the firmer trend on key crude oil freight rates was due to signals from OPEC that more oil was on the way and strong demand from China. Simpson Spence and Young brokers said the Pacific market was especially strong on the back of Chinese demand.
"This is both for direct Chinese crude imports and to feed refineries in South Korea and Japan for product exports to China," it said in a report citing a rise in year-on-year crude imports of 33 percent or 2.4 million barrels per day in Q4.
VLCC freight from West Africa to the United States was trading at a firm W105 or $63,899 per day, brokers said. Suezmaxes, 130,000 tonne tankers, are trading at W135-W140, brokers said.
Rates have firmed between 10-30 points on core export routes last week as demand picked up, but prices are well down from peaks made in January and early February.
Prices on the bellwether VLCC voyage from the Gulf to Singapore have slid from peaks of W172.50 in early February. Rates to the United States have also sunk sharply from peaks hit around the same time.
The Baltic Dirty Tanker Index, a measure of crude oil freight, has lost close to half its value from a peak of over 2200 points in January to just over 1200 in May.
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