Going gets tough

摘要

Razor-thin margins and the oil market's flip into backwardation - with prompt premiums to forward prices - are making it tougher for trading firms this year. Mercuria's net profitability is just 0.5pc of revenue, chief executive Marco Dunand told the FT Global Commodities Summit in Lausanne, Switzerland, on 19-21 March. "This is very small, and you do not have a lot of margin for error." Dunand points to high back-office costs in the sector, as well as the looming pressure of US interest rate rises hiking the cost of financing oil trade. "It is really expensive to run a trading company," he says. "If you make small mistakes, you can easily turn from profit to loss."