Vitol Made Record Net Profit in 2021

Global energy trader Vitol Group made a record net profit of just over $4 billion last year, sources familiar with the matter said, as oil, natural gas and other commodity prices soared.

Vitol, the world's biggest independent oil trader, declined to comment.

The unaudited result beats its previous record net profit in 2020, when oil markets were upended by the COVID-19 pandemic. Bloomberg reported Vitol made $3.2 billion in 2020. The company does not disclose its net profit.

Last week, Vitol said revenues leapt to $279 billion in 2021 as oil prices recovered from 2020 lows. Its revenues were $140 billion in 2020. 

The company said it traded 7.6 million barrels per day (bpd) of crude and refined products in 2021, up from 7.1 million bpd in 2020. Traded oil volumes were still lower than its 2019 record of 8 million bpd after taking a hit during the very low demand period of the pandemic. Jet fuel in particular was still down 22%.

For traders, 2021 was initially a tougher year to make money than 2020, when the market structure was in a dramatic contango - with front-month oil futures prices higher than the following months - which makes storing oil profitable.

For most of last year, the market was in backwardation - the opposite situation - but the oil price LCOc1 became more volatile and rose by over 50% compared with the start of the year.

The sharp rally in gas prices in the second half of 2021 boosted traders' bottom lines. Natural gas and electricity prices around the world soared on tight gas supplies and higher demand as economies rebounded from the COVID-19 pandemic.

Benchmark European gas prices TTF and Asian LNG prices spiked to unprecedented levels in the fourth quarter, though TTF has since hit new records following Russia's invasion of Ukraine.

“When you see the Henry Hub to TTF spread, it’s a multiple of what it used to be so it boosts the profitability,” one of the sources familiar with the results said.

Vitol traded 12.9 million tonnes of liquefied natural gas (LNG) in 2021, up from 10 million in 2020, while its power and gas volumes grew by 30%.

Rival trading firm, Geneva-based Trafigura, posted a record net profit of $3.1 billion for its financial year ending Sept. 30. Last week, Swiss firm Mercuria Energy Trading reported a record net income of $1.26 billion.

Oil major Shell RDSa.L, the largest trader of liquefied natural gas (LNG), said its integrated gas earnings were boosted by "significantly higher" profits from trading.

(Reuters - Reporting by Julia Payne and Dmitry Zhdannikov; Editing by Mark Potter and Jonathan Oatis)