RBC Predicts Tight Gas Markets to Boost Glencore's Second-Half Performance

RBC Capital Markets has made an optimistic forecast for Glencore's second-half performance. According to RBC, tighter natural-gas and liquefied natural gas (LNG) markets could create more price swings that Glencore's trading arm can capitalize on.

The investment bank notes that the current system has little slack, with inventories tight and a risk of supply squeeze if there is renewed escalation in the Middle East. This scenario would be exacerbated by summer demand peaks.

RBC also highlights the specific risk of Qatar LNG exports falling short, which could lead to Europe's gas storage missing targets and keeping gas prices high. When gas prices remain elevated, utilities often switch to thermal coal, particularly in Southeast Asia. RBC estimates that a 10% rise in thermal coal prices would boost Glencore's spot earnings before interest, taxes, depreciation, and amortization (EBITDA) by about 4%.

The bigger lever for Glencore, however, is its energy marketing unit. This division profits from volatility and spreads by rerouting cargoes and hedging. RBC now expects more upbeat guidance for second-half marketing earnings after earlier modeling that marketing profit (earnings before interest and taxes, or EBIT) would fade from $2.5 billion in the first half to $1.6 billion in the second half of 2026.

Glencore's August 5 results will provide a crucial test for RBC's forecast. A positive outcome could reset expectations for Glencore's performance and have broader implications for commodity markets.