* Q1 loss $1.15/shr vs est loss/shr $1.69
* Q1 TCE rev down 10 pct at $206.6 mln vs est $205.8 mln
* Says crude freight rates continue to show weakness
* Shares up 5 pct; touch 3-week high (Adds details, analysts' comments; updates shares)
By Krishna N Das
BANGALORE, May 3 Overseas Shipholding Group , the No. 2 independent tanker group in the world, posited a narrower-than-expected quarterly loss as a 50 percent jump in its U.S. business revenue offset a decline in rates paid to it.
The U.S. segment's time charter equivalent (TCE) sales rose to $68.4 million -- one third of total revenue -- as one shuttle tanker and two product carriers delivered in 2010 started multi-year contracts at attractive rates.
The New York City-based company also benefited from higher volumes of lightering -- the process of transferring cargo from a larger vessel to a smaller vessel.
Overseas' shares, which are down more than 20 percent this year, were up 5 percent at $29.00 -- a 3-week high -- in Tuesday morning trade on the New York Stock Exchange.
"While we believe that a long-term turn in the tanker market is likely an H2 (second-half) event at the earliest, we believe Overseas may be positioned to move higher over the near term," Wells Fargo analyst Michael Webber, who rates the stock "outperform," said.
The January-March loss was the company's eighth straight quarterly loss. It has been hurt by the flurry of new ship delivery in the international market.
"While our markets continue to show weakness, particularly crude freight rates, and our results remain disappointing, we believe our business is moving in the right direction," Chief Executive Morten Arntzen said.
Noting that the negative view for the crude transportation market is already baked into the Overseas stock, Credit Suisse analyst Gregory Lewis said the company will gradually improve results.
"While we expect earnings to push higher through 2012 we do not expect Overseas to return to the black until fourth quarter of 2012."
First-quarter loss at Overseas widened to $34.6 million, or $1.15 a share. TCE revenue fell 10 percent to $206.6 million.
TCE is used by the shipping industry as a standard measure of the average daily revenue performance of a vessel.
Analysts on average expected the company to lose $1.69 a share, on TCE revenue of $205.8 million, according to Thomson Reuters I/B/E/S. (Reporting by Krishna N Das in Bangalore; Editing by Maju Samuel)