Crude oil tanker earnings on the major Middle East route steadied as firmer cargo enquiry in recent days boosted sentiment.
Brokers and analysts said the outlook remained challenging, with increased demand needed to sustain modest gains.
The world's benchmark VLCC export route from the Middle East Gulf (MEG) to Japan DFRT-ME-JAP reached W41.89 in the worldscale measure of freight rates, or $11,362 a day when translated into average earnings, from W42.59 or $11,159 on Friday and W41.41 or $6,773 last Monday.
"Recent declines in the MEG VLCC market were halted last week as owners held firm in anticipation of the arrival of July stems. Their resistance paid off as renewed activity ... prompted modest rate gains," ship broker SSY said on Monday.
"In the meantime, tonnage in the MEG looks ample further out into July, and rates could soon come under pressure once more."
Earlier in June, average daily earnings fell to their lowest in seven months at $5,923.
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.
In April earnings reached their highest in a year at about $45,000 a day, fuelled by a cargo rally, which subsequently ran out of steam.
A rush of fixings earlier in April from Saudi Arabia to the United States, together with buoyant Asian demand, bolstered sentiment as buyers sought to ensure stable supplies, given growing fears of disruptions due to the tensions with major oil producer Iran.
Average VLCC earnings have been volatile in recent months, falling below the $10,000 a day level a number of times. Until last Monday, earnings had stayed above $10,000 a day since Feb. 15.
Speculators could soon hoard crude oil in supertankers off the coast of Britain and other European countries if prompt oil prices keep falling, shipping and oil industry executives say.
"Floating storage has the potential to come back if the current structure goes to contango, which would be rather good for the tanker market," a senior ship industry source said.
Storage at sea hit a peak in April 2009 of over 100 million barrels, bolstering tanker earnings. The trading play then ended leading and more tankers returned to the trading fleet.
VLCC rates from the Gulf to the United States DFRT-ME-USG were at W30.36 from W30.68 on Friday and W30.32 last Monday.
Tanker players said downside risks remained for the sector given worries about the global economy and the fact that more tankers, ordered when times were good, were still to join the global fleet.
Rates for suezmax tankers on the Black Sea to Med route reached W70.17 or $14,829 a day from W69.33 or $13,696 a day on Friday and W73.75 or $15,510 a day last Monday.
Cross-Mediterranean aframax tanker rates were at W97.05 or $17,116 day on Monday, compared with W98.64 or $17,581 a day on Friday and W105.41 or $19,823 a day last Monday.