Financial Times And Bloomberg: Boomtime For Commodities Trading Is Now, As Oliver Wyman’s Report Shows
March 06, 2023
The commodity trading industry set an all-time record in 2022 for gross margin, surpassing $100 billion and almost tripling pre-pandemic levels.
The key commodities driving the rise in trade were oil and natural gas and the players that saw dramatic increases were the traditionally non-asset-backed traders, according to Oliver Wyman’s study.
Interviewed by Bloomberg, Ernst Frankl, partner in the Energy and Natural Resources practice, explained the return of hedge funds to commodity trading: “they’ve really built up their capabilities in a return to the market, and quite successfully so”. [read the full Bloomberg article on Yahoo Finance]
Increases in trading margin were supported by four key market factors that drove opportunities for traders including: extreme uncertainty, impact of rapidly switching trade flows, expanding demand in short markets, and the increasing cash requirements on operations.
“We are seeing under-investment and underproduction across commodities” Adam Perkins, partner in Energy and Natural Resources commented in the Financial Times: “we would have probably seen volatility going up [in 2022] in any case.” [read the full Financial Times article here]