Trafigura's Oil Trades Surge as Market Recovery Underpins Record Year
12.13.2021 - NEWS

December 13, 2021 [SPGlobal] – Trafigura saw its oil and gas trading volumes jump 25% during its financial year to Sept. 30 as recovering demand as the pandemic retreats fueled record earnings at one of the world’s biggest independent commodity traders.

 

The Singapore-based trader said it is also upbeat that oil prices and trading volumes will continue to rise in 2022, underpinned by under-investment in new upstream production and greater demand for its supply chain management.

Traded volumes of crude, oil products, gas and LNG, Trafigura’s core business segment, averaged 7 million b/d of oil equivalent in the financial year, up from an average of 6.4 million boe/d in the 2020 fiscal year, the company said.

“It was a year that saw the global economy recovering from the shock of COVID-19, albeit unevenly in different regions, and one in which underlying fragilities in global supply chains were laid bare, as demand rebounded whilst logistics and supply struggled to keep pace,” CEO Jeremy Weir said in a statement.

The company’s crude trades rose to 156 million mt, or some 3.1 million b/d, in the year, up from 127.5 million mt in the 2020 fiscal year.

Trafigura said it benefited from growth in its key position supplying US Midland shale oil to world markets, where it continued to invest in pipelines, storage tanks and dock facilities.

“Another highlight of the year was a major supply arrangement to source all the feedstock requirements of the UK Prax Lindsey Oil Refinery, a significant expansion of Trafigura’s relationships with refiners and a sign of new opportunities opening up as some of the oil majors reduce their downstream commitments,” Trafigura said. “We also secured new offtake agreements in Canada, Latin America and West Africa.”

Upbeat on oil price

Looking ahead, Trafigura said it sees further upside to its oil trading activities and earnings amid more market volatility as the world continues to recover from COVID-19 and the market tightens due to lower upstream spending.

“The protracted stock drawdown that created a backwardated market in 2021 is now complete; prices have been rising accordingly and we expect this trend to continue into 2022, underpinned by general under-investment in new crude oil production,” Trafigura said. “We expect our services in supply chain management and connecting supply and demand to be in even greater demand.”

Brent crude prices recovered by 92% over the year to Sept. 30 to average $62.25/b as the global economy recovered from swingeing pandemic lockdowns in 2020.

Trafigura posted a net record profit of $3.1 billion for the financial year, almost double the $1.6 billion of a year earlier. Its total revenues increased by 57% to $231.3 billion, reflecting higher commodity prices and increased trading volumes as the group continued to grow its customer base and expand into new markets.

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