Energy trader Gunvor’s earnings are halved as market volatility decreases

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Energy trader Gunvor has reported a halving of its earnings for the first six months of 2024, anticipating tougher trading conditions ahead, becoming the latest company to be hit by a easing of market volatility that boosted sector profits after the Russian invasion of Ukraine.

The trading house, controlled by billionaire Torbjörn Törnqvist, said on Tuesday that net profit was $417 million, which was 50 percent lower than the same period a year earlier, but remained “well above historical levels of profitability”.

The sharp drop in profits at the Geneva-based trader comes after one of its rivals, Trafigura, reported in June a more than 70% drop in its earnings in the six months to March, reflecting a normalization of trading conditions after a period. of unprecedented profit growth for companies.

“The outlook for (the rest of) 2024 is (for) tougher trading conditions to continue and outsized profit generation to remain challenging,” Gunvor said in a statement on Tuesday. Commodity prices have become less volatile despite the conflict in the Middle East.

Brent crude, the international benchmark, has averaged $82.93 a barrel so far this year and was trading at $79.72 on Tuesday. This contrasts with wide ranges in 2022, when it fluctuated between $75.11 and $139.13.

Gunvor said volatility in European natural gas and liquefied natural gas markets was similarly low, with prices down about 30% to 35% compared to the first half of 2023.

Energy markets remained relatively calm amid concerns about slowing growth and waning oil demand, defying the prospect of significant supply disruptions despite conflict in the Middle East and attacks on shipping in the Red Sea by Houthi rebels.

In its June results, Singapore-listed Trafigura said net profit in the six months to the end of March fell to $1.5 billion from $5.5 billion in the first half of 2023 and $2.7 billion in the same reporting period in 2022.

Gunvor said it raised first-half revenue to $68 billion, up from $61 billion in the same period in 2023, as higher volumes more than offset lower natural gas prices and LNG. Oil and petroleum products were the main drivers of volume growth, while gas was flat.

The company reported lower refining margins due to slower fuel demand growth and the “continued normalization of market imbalances” since the outbreak of the Ukraine war and Western governments imposed sanctions on Russian exports.