Strong demand for oil storage and higher trading volumes are buffering market giants such as BP, Shell and Total from price plunges caused by the global glut. While companies are typically cagey about their trading profits, history suggests the bear market has some upside for companies better known for their production and retail arms. Stratton Street Capital chief investment officer Andy Seaman said he expected a “huge uptick”, given that trading accounted for at least 20 per cent of BP‘s adjusted first-quarter profit of $US2.38 billion in the last bear market in 2009. “With volatility increasing dramatically over the last few months, [BP, Shell and Total’s] commodity trading desks have seen big upswings in volume and profits,” he said. The amount of crude oil and fuel traded each day by the three European majors together dwarfed the combined size of independent traders such as Vitol, Glencore, Trafigura, Mercuria, and Gunvor, Bloomberg said. The US benchmark West Texas Intermediate was trading at $US46.91 ($59.77) a barrel in Asian trade on Wednesday, down more than 50 per cent from this time last year, while Brent crude oil fetched $US55.55, down 47 per cent. But shares in Shell and BP have had much … continue reading
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Source: CTRM Center