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Trafigura’s Profit Dips, Oil Trade Volumes Jump

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Commodities trader Trafigura said on Wednesday that its profit for the year ending 30 September 2016 dropped by 12 percent to US$975 million on the back of low commodity prices, but oil trade volumes increased.

Trafigura’s revenues came in at US$98.098 billion, compared to US$97.237 billion in the same period of 2015. EBITDA, however, dropped by 13 percent to US$1.628 billion, amid intense competition and challenging commodities market.

In addition, Trafigura wrote down the balance-sheet value of certain assets as the depressed price environment affected its industrial assets. Trafigura booked impairments of US$365 million in the fiscal year to September.

In the Oil and Petroleum Products Trading Division, volumes of trade grew to a daily average of 4.3 million barrels, up by 42 percent from the 3 million barrels handled in the 2015 fiscal year.

Tanker rates dropping to historic lows led to increased global arbitrage business, Trafigura said in its annual report today.

“Russian crude remained an important component of the book, thanks to our developing commercial relationship with Rosneft,” the group said.

Trafigura also increased its business with Chinese state-owned oil corporations and a saw a surge in purchases by private-sector Chinese refineries newly licensed to import crude. One of the group’s priorities for the immediate future is to extend its business in arbitrage flows from the US and Latin America into Asia.

Related: How OPEC Have Papered The Oil Market Cracks

Commenting on the 2016 fiscal year volumes trading performance, chief executive Jeremy Weir said in the statement:

“Conditions remained broadly favorable for trading in the oil market, featuring sustained price volatility and over-supply.”

Looking ahead, Trafigura expects challenging conditions in commodities markets to persist in 2017. The group will continue to focus on physical trading, logistics, and risk management, CFO Christophe Salmon said.

In October, Trafigura sold five medium-range oil tankers to a Chinese bank, which marked the group’s exit from owning product tankers —at least for now.

By Tsvetana Paraskova for Oilprice.com

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