Glencore share price: Group bets on North Sea oil

on May 13, 2016
Updated: Oct 21, 2019

Glencore (LON:GLEN) has taken out a big bet on the North Sea oil and gas industry, building up a position in part of the Brent crude market, Reuters has reported. The move comes at a time when the troubled mining group looks to reduce its massive debt pile.

Glencore’s share price has been subdued in today’s session, having slipped 0.69 percent to stand at 130.20p as of 13:32 BST, largely in line with the blue-chip FTSE 100 index which is currently 0.37 percent worse off at 6,081.44 points. The group’s shares have lost more than 56 percent of their value over the past year, but are up some 44 percent in the year-to-date.
Trade sources told Reuters yesterday that Glencore had built up one of the largest positions in part of the Brent crude market which acts as a benchmark for global oil prices since the start of the year. The Brent market is based on four North Sea crude oils, namely Brent, Forties, Oseberg and Ekofisk, or BFOE. The sources noted that the FTSE 100 group was holding more than a third of the 37 BFOE cargoes loading in June and was expected to acquire more.

“It’s definitely a bold statement of market view by Glencore,” a trading source said, as quoted by Reuters. “You’d have to be in their heads and in their books to know exactly what’s going on.”
Other traders, however, explained that there were a small number of participants in the Brent market and it was not uncommon for them to take large positions, which sometimes resulted in unusual patterns in related physical and paper markets.
In analyst ratings, Independent Research, which has a ‘neutral’ rating on Glencore, set a price target on the stock of 150p this week, while Canaccord Genuity, which sees the FTSE 100 group as a ‘speculative buy,’ boosted its valuation on the shares from 180p to 200p. Liberum Capital meanwhile reaffirmed Glencore as a ‘hold’, without specifying a price target.
As of 14:05 BST, Friday, 13 May, Glencore Xstrata PLC share price is 130.50p.


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