Reuters is reporting that Barclays, one of Britain’s largest banks, is existing the energy markets, joining others financial institutions such as RBS Sempra and Deutsche Bank who had previously given up on energy. Reuters notes one potentially significant impact of the closing of their energy business: The departure of Barclays exacerbates the scarcity of counterparties for trade when producers are trying to hedge their production for 2018 and beyond, potentially raising the cost to lock in that output. That increase could force cash-strapped producers to forgo protection altogether, putting them at risk if the market takes another leg down. Some producers seek to lock in future profits and fund expansion through selling as much as 80 percent of production years into the future. “It’s one less bank willing to make a trade in the market, which reduces liquidity overall. That’s one less source of credit and one less counterparty,” said John Saucer, vice president of research and analysis at Mobius Risk Group. While, as noted, many banks have left the market due to regulatory pressures and low prices, this one could have a CTRM twist to it. The Financial Times is quoting Joe Corcoran, Barclay’s head of markets, telling his
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