Glencore (LON:GLEN) is set to offload a bundle of its global oil storage stakes, Reuters has revealed. The move would follow similar sales by rivals, with the boom for storage showing signs of drawing to a close.
Glencore’s share price has fallen deep into the red in today’s session, having lost 2.28 percent to 310.25p as of 14:19 BST, underperforming the benchmark FTSE 100 index which currently stands 0.41 percent lower at 7,339.17 points. The group’s shares have gained more than 97 percent over the past year, and are up by nearly 12 percent so far in 2017.
Sources with knowledge of the matter told Reuters today that Glencore was selling a bundle of its global oil storage stakes, including assets in Argentina, Belgium and Madagascar.
“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 of the sources told the newswire, adding that the assets were generating core earnings of around $75 million a year.
Demand for storage surged following the oil price plunge in 2014, with the abundance of crude for immediate delivery allowing traders to profit from buying oil cheaply and storing it to resell later as prices recover. The market balance, however, started to change after the Organisation of the Petroleum Exporting Countries (OPEC) decided to cut oil output at the end of last year to prop up prices and reduce the global supply glut.
In analyst ratings, Credit Suisse, which sees Glencore as an ‘outperform,’ boosted its valuation on the shares from 400p to 410p yesterday. According to MarketBeat, the blue-chip miner currently has a consensus ‘hold’ rating and an average price target of 344.74p.