Swiss-based trading and mining giant Glencore is selling a bundle of its global oil storage stakes, sources told Reuters, following similar moves by rivals as a boom period for storage shows signs of nearing to an end. Demand for storage exploded following the oil price plunge in 2014 because the abundance of crude for immediate delivery meant traders could make millions by buying oil cheaply and storing it to resell later as prices recover. As the Organisation of the Petroleum Exporting Countries (OPEC) decided to cut oil output at the end of 2016 to prop up prices and help ease the global glut, the market balance began to change.
Today, future prices are no longer trading at a steep premium to immediate prices, thus reducing the appeal of storing oil and prompting some of Glencore's rivals to reduce exposure to storage assets, including Vitol and Gunvor. If the sale reaches completion, Glencore will likely end up with minority stakes in the assets. The company owns much of its storage terminal interests via joint ventures and is selling half of these stakes, the sources familiar with the sale said.
A spokesman for Glencore declined to comment. "It's an exotic combination of assets with a variety of functions, mainly storage. It's most, if not all, of Glencore's global liquid storage," one source said. The portfolio includes assets in Argentina, Belgium and Madagascar, the source said.
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