Baltic Dirty Tanker Index (BDTI) Does Not Indicate All Is Well

The Baltic Dirty Index measures oil tanker rates and this index has not been doing great. (ps: do you think such an index would be useful? )

The BDTI ended 2008 at 1243 points.

It last closed at 474 points.

No joke.

Here's the one year chart of BDTI.

And of course the collapse in the index has caused havoc for shippers like Overseas Shipholding. On Bloomberg news last week. Overseas Shipholding Has Loss as Spot Rates Decline

• Aug. 5 (Bloomberg) -- Overseas Shipholding Group Inc., the largest U.S.-based oil-tanker owner, reported a smaller-than- expected second-quarter loss as rates to transport oil fell amid a global economic recession.
  
  The loss was $8.79 million, or 33 cents per share, compared with net income of $86.9 million, or $2.81 a share, a year ago, New York-based Overseas Shipholding said in a statement. Revenue declined 34 percent to $282.7 million from $428.2 million. The company was expected to lose 67 cents per share, the average estimate of five analysts surveyed by Bloomberg.
  
  Spot, or one-voyage, rates fell 71 percent from a year earlier as a global economic recession cut fuel demand, according to the Baltic Dirty Tanker Index, a measure of rates for vessels of various sizes on routes around the world.
  
  “They’re still primarily going to be tied to the spot market, and these weak rates are going to be felt by OSG today,” Greg Lewis, a New York-based analyst at Credit Suisse, said. “We’re in a really weak period, and rates are going to continue to bounce around these levels.”
  
  The earnings report was released before the open of regular trading on U.S. stock markets. Overseas Shipholding rose $1.19, or 3.3 percent, to $37.11 in New York Stock Exchange composite trading. The shares have fallen 12 percent so far this year.
  
  Net income included items that totaled $1 million, or 4 cents a share. Year-ago net income included items that totaled $14.7 million, or 36 cents.
  
  ‘Tough Market’
  
  “It was a very tough market for tanker owners,” Chief Executive Officer Morten Arntzen said on a conference call. “Rates were down across the board.”
  
  The loss was the ship owner’s first since 2002, excluding the fourth quarter of 2008 when the company reported 170.6 million in goodwill and asset-impairment charges. Arntzen said another loss was likely in the third quarter.
  
  Jon Chappell, a New York-based analyst at JPMorgan Chase & Co. on July 21 estimated global oil demand would fall 2.1 million barrels a day this year, and the size of the fleet would grow 9.9 percent, exacerbating “the dreaded ‘too-many-ships- for-too-few-cargoes’” market environment.
  
  Rates Fall
  
  Overseas Shipholding said its 17 supertankers were chartered in the spot market at an average rate of $32,020 per day, 68 percent lower than the year-earlier period of $98,747 per day.
  
  The so-called Very Large Crude Carriers can carry 2 million barrels of oil. These ships operate mainly out of the Persian Gulf on routes to Asia and the U.S.
  
  Suezmaxes, which can carry 1 million barrels of oil, earned an average spot rate of $23,847, down 61 percent from last year’s $61,098.
  
  Lewis said revenue beat his estimate due to “better-than- expected performance by the crude VLCC and Panamax fleets and the international product tanker fleet.”
  
  The ship owner said it was paid an average of $16,757 per day for its Aframax tankers in the spot market, where rates vary by voyage, down 70 percent from $55,543 a day a year earlier. Aframaxes can carry about 600,000 barrels of oil.
  
  “The tanker market we’re in today is challenging and will be challenging for the next few quarters,” Lewis said.
  
  Overall, Overseas Shipholding totaled 9,725 revenue days for the quarter, from the year-ago period of 9,648 days.