Commodities have always been a hotly traded market, and 2019 has given traders in the sector plenty of excitement whether it be in the form of rising precious metal prices or the growth in oil prices due to OPEC cuts.
In the case of energy, it’s becoming clear that while OPEC has been doing it’s best to restore prices to higher levels, this is going to be harder to accomplish in the future as other factors, such as the US’s growing shale output, will exert further downward pressures on both demand and overall prices. Today, the world’s top independent commodities trader went on to say that they expect oil demand to peak.
Vitol is an energy and commodity trading firm that is involved mainly in the energy sector and engages in trading, refining, shipping and exploration of various energy assets. The private company, based out of Britain, is considered one of the bigger players in the energy market, alongside other energy giants like Royal Dutch Shell and Enron. Today the company released it’s “Vitol 2018 volumes and review” report, which partially discussed prevailing industry trends in the energy sector and how Vitol would begin transitioning into alternative energy sources.
“We are cognizant of the increasing move to alternative sources of energy and are considering how our skill sets can best be deployed in these new areas. In the meantime, we are investing in new and established technologies which may form an important part of the energy transition. In January, our joint-venture with Low Carbon, VLC Energy, completed the construction of the UK’s largest battery park portfolio, a key resource for a system looking to build its renewable capacity,” said Vitol according to their website summarizing the report. “Also with Low Carbon, we announced our intention to invest in renewable energy assets across Europe, with a focus on large-scale wind generation. As a major participant in Europe’s power markets, it is important that we understand and participate in renewable power generation.”
The announcement from the company underscores the chorus of other voices in the industry saying that the sector needs to change and move on towards other sources of energy. Many companies are investing significantly into alternative sources, such as solar and geothermal, alongside the less conventional but increasingly attractive uranium market.
“There is an increasing focus on the long-term outlook for oil demand. We are supportive of the need to move to more renewable sources of energy. However, at present, we do not see how this can be achieved across all sectors in the near to mid-term, without halting economic development in large parts of the world,” added the company. “We anticipate that oil demand will continue to grow for the next 15 years, even with a marked increase in the sales of electric vehicles, but that demand growth will begin to be impacted thereafter.”
According to The Financial Times, Vitol was one of the few companies that profited substantially from oil’s price volatility in the second half of 2018. While a private company, some insiders have reported that Q3 and Q4 profits were three-times what they were during the first half of the year, proving the business hasn’t lost its signature strength in trading the energy markets.