Oil traders are profiting handsomely from a crude price crash to near an 11-year low, even as it forces energy companies around the globe to slash costs and postpone projects.
From listed giant Glencore through unlisted Swiss privately-held Trafigura, to the trading desks of majors BP and Shell, traders have often done well in times of oil price downturns, and markedly so this time around.
On Monday, Trafigura, which trades roughly 3 percent of global oil, reported record earnings just days after Glencore said it was sticking to its trading earning guidance even though it cut production at some mines and reduced inventories.
BP and Shell have repeatedly cited trading as one of the divisions that helped withstand the storm of low oil prices and boosted downstream earnings by hundreds of millions of dollars.
The recipe is simple - volatility and scale, according to Trafigura.
"Our business is very much related to physical trading. So when you have volatility, it multiplies the sources of arbitrage on the physical trading markets and, the bigger your business, the better. It is at the end of the day a volume game," Trafigura's chief financial officer Christophe Salmon said.
Salmon said arbitrages were working both geographically - between regions of good and bad supply - and along the time price curves when immediate prices were lower or higher than forward prices.
Immediate flat price swings are most often offset by traders through hedging their positions, he added.
Using oil storage, now a popular ploy, helped traders exploit a contango price structure in which immediate delivery oil is discounted, and so can be stored and sold later at a healthy profit
"The emergence of contango price structures created significant opportunities," said Jose Larocca, Trafigura's head of crude oil
"We responded by aggressively expanding our access to storage capacity around the world and using our logistical assets to maximum advantage in support of our trading activity," he said in the annual report.
"Looking ahead into 2016, we expect the gasoline market to remain over supplied and storage to be an increasingly important success factor," Larocca said, adding the firm would invest in acquiring additional capacity.
Global imbalance in diesel, naphtha and condensate also offered good profit opportunities as well as rising trading in liquefied natural gas, helped by demand from new importers such as Egypt and growing supply.
Trafigura is the first big commodity trading house to report results as its reporting period is from September to September. Its rival such as Vitol, Glencore, Mercuria and Gunvor will
report full 2015 results in February or later.
(By Amanda Cooper and Dmitry Zhdannikov; Editing by William Hardy)