March 15, 2021 [Argus Media] – Shell almost doubled its profit from crude and oil products trading to $2.6bn last year, helped by increased market volatility caused by the Covid-19 pandemic.
The firm revealed its oil trading earnings in its annual report but did not disclose profits from non-oil trading activities. Shell trades more oil than any of the world’s biggest trading companies including Vitol, Trafigura, Mercuria and Gunvor, but it does not officially disclose its traded volumes. Vitol traded about 8mn b/d of oil in 2019.
Trading firms and the trading divisions of large integrated companies such as Shell, BP and Total all benefited from extreme oil market volatility in the second quarter of last year, driven by unprecedented developments in both supply and demand. At the time, Shell talked about the “very strong contributions” made by crude and oil products trading.
The firm was not alone in profiting from the market volatility. Trafigura, which also trades metals, said it had the best year in its history in the 12 months to 30 September, with its oil and petroleum products division accounting for 75pc of gross annual profit, or $5.3bn.
BP has not revealed its oil trading profits for last year, but chief executive Bernard Looney said last September that the company’s total trading activities tend to boost its return on average capital employed (Roace) by close to 2 percentage points. The firm’s average capital employed was about $124bn in 2015-19, suggesting returns from trading averaged about $2.5bn/yr.
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