Glencore narrows EBIT trading view and pares oil output plans

By Barbara Lewis and Esha Vaish LONDON/BENGALURU (Reuters) - Glencore on Thursday narrowed its expectations for pre-tax profit from trading on Thursday and lowered its oil production plans as the mining and trading firm waits for "a stronger price environment". Glencore narrowed its full-year earnings from trading before interest and tax (EBIT) view to a range of $2.5 billion (£2.01 billion) to $2.7 billion from $2.4 billion to $2.7 billion previously. Along with Anglo American , Glencore was among the companies worst affected by a commodity price rout and has been among the biggest gainers from a rebound this year. Its shares have risen by around 170 percent this year as asset sales and a favourable bond market have allowed it to reduce its debt burden. In its third-quarter output report, the mining and trading firm also said its production of copper, zinc, oil and coal for the third quarter was lower than the same time a year earlier, but "in line with expectations" following announced supply reductions. Full-year oil production guidance was lowered to 7.4 million barrels per year from 8 million, with a 100,000 barrel margin of error. Glencore has taken action to reduce supply as, like other miners, it seeks to boost profit margins. It said replacement oil volumes had yet to be drilled "as the resource is being preserved for a stronger price environment". Glencore saw its biggest cut in zinc, whose production was down 30 percent year on year, while copper fell 6 percent, coal 11 percent and Glencore's oil output was 25 percent lower than a year ago. Zinc prices are up by around 50 percent this year, making them the best performing metal on the London Metal Exchange, partly boosted by Glencore's output cuts. But nickel output was up 20 percent from a year earlier, mainly due to major maintenance at the Sudbury smelter in 2015. Glencore's share price was down around 1 percent by 0823 GMT, in line with the broader sector. <.FTNMX1770> Credit Suisse analysts called Glencore's statement a solid report and said the narrowed EBIT range for trading reflected "improved trading conditions within the coal division". Thermal coal prices have more than doubled this year, but Glencore, the biggest shipper of seaborne coal, lost out on some of the upside because of a hedge placed when prices were lower. It has been making up some of the losses through trading of its non-hedged production. Credit Suisse said coal was "a key sensitivity", noting a $10 per tonne price move translated into a more than $1 billion impact on core earnings. (This story corrects to read per year in paragraph six) (Editing by Jason Neely)