* Lower product shipments from India, Mideast
* Diesel comes off floating storage, frees up ships
* More new builds to enter market in first quarter
* No significant rate recovery until 4th quarter -Bancosta
By Jessica Jaganathan and Keith Wallis
SINGAPORE, Feb 10 (Reuters) - Dozens of tankers used to carry refined oil products are sitting idle in Asia and the Middle East as slow trade and an oversupply of ships have cut daily earnings to as little as a fifth of last year's level, shipbrokers and traders said.
Shipping data in Thomson Reuters Eikon shows around 50 product tankers currently floating idle off Singapore and Fujairah, United Arab Emirates.
Besides a drop in shipping activity due to the Lunar New Year holiday in late January - observed across much of Asia - a string of unplanned refinery outages in Asia and the Middle East slowed product trading and curbed fuel exports.
Many refineries are also about to go into seasonal repair and maintenance periods, resulting in lower forward tanker bookings to ship refined products.
The low trading activity is clashing with a wave of ships coming to market, with 18 newly built oil product tankers, known as Long Range 2 (LR2), expected to enter service in the first quarter and further weigh on freight rates.
"Many owners, including us, are refusing to fix long haul (fuel supply voyages) at present earning levels," a shipping source with a major tanker company said, declining to be named as he was not authorised to speak with media.
Earnings for a long-range tanker have slumped to $3,000 to $5,000 a day, three shipbrokers said. That compared with an average of around $16,500 a day last year and $30,500 a day in 2015, figures from shipping services firm Clarkson showed.
The earnings are less than daily operating costs of $6,000-$8,000, shippers and accountancy firm Moore Stephens said.
About 40 LR2s are available for loading in the Middle East in the next three weeks, said Rachel Yew of OFE Insights in a note this week.
Overall, the global LR2 fleet is expected to grow by 15.9 percent this year in tonnage terms to around 39 million deadweight tonnes (DWT), according to a report by ship broker Banchero Costa (Bancosta) this month.
This fleet capacity expansion will likely put further pressure on product tanker rates this year, said Ralph Leszczynski, Bancosta's head of research in Singapore.
"We do not expect any significant recovery in the market from current levels until the final quarter of this year," Leszczynski said.
With diesel prices for the prompt month turning higher than cargoes loading in forward months, the fuel is being sold from tankers used as storage, freeing up more ships, traders said.
One traditional supplier of refined products to Asia is India, but exports from there are set to fall due to domestic demand for transport fuels and as its industry needs more fuel for rising petrochemical production.
Reporting by Jessica Jaganathan and Keith Wallis; Editing by Henning Gloystein and Tom Hogue