Glencore CEO Ivan Glasenberg made no bones about the fact that he thinks oil will recover in 2015. He told the Financial Times that the commodity will “blow out the lights” in 2015, after a year which saw oil prices halved and energy companies lose value.
Glencore is one of the largest commodies companies, with mining and energy operations. Even though Glencore’s oil assets were declining, its other businesses have seen strength after years of sluggishness following the financial crisis. Glasenberg owns 8% of Glencore, and thinks there are opportunities in the energy sector. One strategy is to buy oil at low prices, store it and sell it at future prices.
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While Glasenberg was enthusiastic about oil, Alex Beard, Glencore’s head of oil, was more conservative in his outlook, and told the Financial Times, “current spreads are by no means attractive enough to encourage floating storage.” The decline in oil prices last year negatively affected Glencore’s earnings, and the company said it would cut back on oil and gas assets.
In January, there was talk of a merger between Glencore and Rio Tinto. If such a deal goes through, the combined company would be worth $180 million with huge assets in industrial metals. Glasenberg, who holds Israeli and Australian citizenship, is required by European law to refrain from making another bid until April. Let’s see what happens next month.