Glencore posts record oil trading earnings despite lower volumes

London — Mining and commodity giant Glencore's traded oil volumes shrank 8% during the first half of the year, but it gleaned record earnings from the business as the market upheaval caused by the coronavirus pandemic fueled a surge in trading opportunities.

Total volumes of crude and oil products traded in the first half were 777 million barrels, or some 4.27 million b/d, down from 868 million barrels a year earlier, Glencore said August 6 in its H1 earnings report.

"Oil markets experienced one of their most volatile periods in history," Glencore said in a statement. "...exceptional price movements and dislocations across crude oil and refined products, combined with soaring demand for and prices of storage and logistics, enabled our oil department to deliver a record half-yearly performance."

Glencore said its H1 volumes of traded crude fell 9% on the year to 437 million barrels, or around 2.4 million b/d crude, while refined oil products fell 7% on the year to 340 million barrels or around 1.87 million b/d.

Commodity traders such as Glencore typically benefit from price volatility by arbitrating geographical and time spreads such as in the wake of the global financial crisis in 2008 and the 2015 oil price slump.

Glencore had already flagged a bumper set of oil trading earnings as trading opportunities soared during the crisis after Brent slumped to four-decade lows and the use of storage and logistics surged.

Outlook still 'highly uncertain'

Despite a record trading result of $2.02 billion for H1, lifted mainly by oil, Glencore posted an overall loss of $2.6 billion after taking $3.2 billion in impairment charges. In H1 2019, Glencore reported a net income of $226 million.

The impairments reflected a lower commodity-price outlook related to longer-term economic uncertainty arising from the pandemic at its thermal coal, oil and zinc operations, Glencore said.

Glencore said its Chad oil operations took an impairment of $673 million, to reflect lower oil price assumptions and operational stoppages due to the coronavirus pandemic.

Looking ahead, Glencore said the economic outlook remained "highly uncertain" despite a raft of fiscal support packages around the world to soften the blow of the pandemic to the global economy.

"The speed and size of the global policy response to tackle the impacts of COVID-19 is unprecedented," CEO Ivan Glasenberg said "....Despite this unprecedented policy support, the outlook remains highly uncertain in the short term, particularly from the risk of second-wave infections in key economies."