One of the world's largest commodity traders, Trafigura, delivered a record performance in oil trading as the trade war and geopolitical flare-ups increased volatility in prices and energy commodity flows.
Trafigura's two core trading divisions - Oil and Petroleum Products and Metals and Minerals - booked record trading performance, the company said in its FY 2019 results release on Wednesday.
"The trading division in particular had a knock out year - in fact their best years' performance ever," Jeremy Weir, Executive Chairman and Chief Executive Officer at Trafigura, said in an overview of the company's 2019 financial year which runs from October 1 to September 30.
Halfway through the financial year, Trafigura's oil and gas trading division had helped the company to nearly double its profit, due to the extreme volatility in prices.
For full FY 2019, Trafigura's gross profit from Oil and Petroleum Products surged by 64 percent year on year to US$1.681 billion.
Crude and oil product volumes increased by six percent to a daily average of 6.07 million barrels, Weir said.
The crude oil market was in backwardation throughout the year, with spot supply constrained by factors such as the U.S. sanctions on Iran and Venezuela's crude oil exports, Trafigura said. The U.S.-China trade dispute and geopolitical concerns created volatility in oil prices and oil flows, the commodity trader said.
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"This was a favourable trading environment for the crude team, which had an excellent year expanding both volumes and profits," Trafigura noted.
The net profit of the company, however, failed to reflect the "knock out" trading performance, because of financial impairments related to some industrial assets and investments. Net profit was flat at US$867.8 million, on a similar level as in the previous two years.
In 2019, Trafigura extended its lead as the biggest exporter of U.S. crude oil, and for 2020 it expects U.S. volumes to continue to grow, demand for U.S. light sweet crude to gain extra momentum from IMO 2020, and margins to continue to build.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More