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Energy trader Gunvor reported a halving of its earnings in the first 6 months of 2024 as it forecast tougher trading conditions ahead, becoming the latest company to be hit by an easing of the market volatility that boosted the profits of the sector after the Russian invasion of Ukraine.
The trading house, controlled by billionaire Torbjörn Törnqvist, said on Tuesday that net profit came in at $417mn, which was 50 per cent lower compared with the equivalent period in the previous year, but remained “well above historical profitability levels”.
The sharp fall in the profits at the Geneva-based trader comes after one of its competitors, Trafigura, in June reported a more than 70 per cent slide in its earnings in the six months to March, reflecting a normalisation of trading conditions after a period of unprecedented profit growth for the 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 per barrel this year so far, and was trading at $79.72 on Tuesday. That contrasts with wide ranges in 2022, when it fluctuated between $75.11 and $139.13.
Gunvor said volatility in the European natural gas and liquefied natural gas markets was similarly subdued, with prices down about 30 per cent to 35 per cent compared with the first half of 2023.
Energy markets have remained relatively calm amid concerns about slowing growth and softening oil demand countered prospects of significant supply disruptions, despite conflict in the Middle East and attacks on shipping in the Red Sea by Houthi rebels
In its results in June, Singapore-registered Trafigura said net profit in the six months to the end of March fell to $1.5bn, from $5.5bn in the first half of 2023 and $2.7bn in the same reporting period in 2022.
Gunvor said it increased first-half revenue to $68bn, up from $61bn in the same period in 2023 as higher volumes more than offset lower prices for natural gas and LNG. Oil and petroleum products were the main drivers of volume growth while gas was stable.
The company reported lower refining margins owing to slower demand growth for fuels and “the continued normalisation of the market imbalances” since the war in Ukraine broke out and western governments imposed sanctions on Russian exports.