22 March 2016, London — Vitol’s (VITOLV.UL) 2015 revenue fell 38 percent to $168 billion, its lowest since 2009, in “challenging” market conditions, the commodity trader said on Tuesday.
The world’s largest independent energy trader’s revenue fell sharply despite traded volumes of crude oil and products rising 13 percent to 303 million tonnes, as lower oil prices weighed.
“Whilst the market structure favors a physical trader, the absolute price levels and market volatility are causes for caution,” Ian Taylor, president and CEO of Vitol said.
Benchmark Brent crude oil prices fell to a 12-year low of $27.10 a barrel in January, before recovering to around $40 this month.
Physical traders have benefited from the lower spot price by storing oil to sell at a higher price later, as prices for future delivery are higher, a price structure known as contango.
“Stocks of crude and products continue to build and these will weigh upon the market,” Taylor said.
Beyond oil, Vitol reported contracted coal sales fell to 20 million tonnes in 2015, from 34 million the previous year.
Contracted natural gas sales fell to 683 terawatt-hours (TWh) in 2015, almost half of the previous year’s 1,202 TWh, while contracted power sales fell to 102 TWh from 117 TWh.
Taylor said slowing global growth and the rebalancing of China’s economy would impact parts of Vitol’s portfolio while a slowdown in demand growth in some energy markets was expected.
“Demand growth will be in line with long-term averages, but below the high levels seen in 2015.”
The average Brent crude price in 2015 was $52.40 a barrel, down from $98.95 the previous year, Vitol said.
Lower oil prices are expected to test some market participants and as a consequence, Taylor said the company was “increasingly vigilant” with respect to counterparty risk.
*Sarah McFarlane, Editing – Mark Potter & David Evans – Reuters