January 25, 2018 / 9:32 AM / 8 months ago

UPDATE 1-Euronav freight rates slide but beat market expectations

(Adds detail, background, analyst)

By Alan Charlish

Jan 25 (Reuters) - Belgian crude oil shipper Euronav’s freight rates in the fourth quarter hit their lowest level since 2012, hurt by excess available tonnage, the company said on Thursday.

However, rates were still higher than many analysts had expected, pushing Euronav’s shares up 1.4 percent by 0847 GMT.

The world tanker fleet expanded by 4.8 percent in 2017 as a large wave of new deliveries offset scrapping, while an agreement in November between OPEC and non-OPEC oil producers to extend output cuts until the end of 2018 has added to pressures on tanker companies.

“The typical seasonal rate pattern for the fourth quarter was not observed,” Euronav Chief Executive Paddy Rodgers said in a statement.

The fourth quarter is typically the strongest for tanker companies because of seasonal oil demand.

Euronav said the increasing number of new vessels, crude export reductions and a spike in production outages meant that a recovery in rates early in the quarter did not continue.

Fourth-quarter core profit fell 30 percent to $87.6 million and average daily spot rates for its very large crude carriers (VLCCs) fell 22 percent year on year to $25,889, it said.

The company said that so far in the first quarter its VLCC fleet had earned about $22,252 per day.

Clarksons Platou Securities analyst Frode Morkedal said the rates so far in the first quarter were better than expected.

“These are much better than ship broker reports have indicated ... you have to remember that the cash break-even is roughly $20,000 per day,” Morkedal said.

Euronav also said that the acquisition of U.S. rival Gener8 Maritime announced in December is proceeding as planned. (Reporting by Alan Charlish; Editing by David Goodman)

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