• 4 minutes Is The Three Gorges Dam on the Brink of Collapse?
  • 8 minutes The Coal Industry May Never Recover From The Pandemic
  • 11 minutes China Raids Bank and Investor Accounts
  • 8 hours In a Nutshell...
  • 5 hours During March, April, May the states with the highest infections/deaths were NY, NJ, Ma. . . . . Today (June) the three have the best numbers. How ? Herd immunity ?
  • 2 mins Putin Paid Militants to Kill US Troops
  • 1 day Is OilPrice a cover for Green Propganda
  • 1 hour Why Wind is pitiful for most regions on earth
  • 1 day Victor Davis Hansen on Biden's mental acuity " . . unfit to serve". With 1 out of 5 Democrats admitting it. How many Dem's believe it but will not admit it?
  • 16 hours Putin Forever: Russians Given Money As Vote That Could Extend Putin's Rule Draws To A Close
  • 1 day Tesla Model 3 police cars pay for themselves faster than expected, says police chief
  • 17 hours Happy 4th of July!
  • 15 hours Apology Accepted!
  • 2 days The Political Genius of Donald Trump
  • 3 days Why Oil could hit $100
  • 3 days Biden admits he has been tested for Cognitive Decline several times. Didn't show any proof of test results.
Exxon May Finally Book Major Writedowns

Exxon May Finally Book Major Writedowns

ExxonMobil could write down the…

Lithium Prices Are Set To Rally

Lithium Prices Are Set To Rally

The European Union’s green recovery…

Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Artificial Intelligence Is Transforming Oil Trade

Artificial intelligence has been making inroads into the oil and gas industry for a while now after the industry realized all the benefits it could reap from the deployment of these technologies. Now, it has begun changing oil and gas trading as well.

First of all, it bears noting the term artificial intelligence has developed into an umbrella term for a host of predictive and analytical technologies that are a far cry from the average layman’s idea of AI, that is, machines capable of independent thought. We are not there yet. Yet the technology has advanced sufficiently to begin transforming the oil and gas industry, including the trade of these commodities and products.

For now, the space of AI-enabled energy trading providers is relatively empty. One notable recent addition to it was OilX, an oiltech startup that provides traders with real-time oil analytics based on a combination of satellite tracking data and reports from various official organizations, including customs, JODI, and statistics agencies.

Thanks to AI, the OilX platform can process and offer traders a lot more comprehensive and hence more reliable oil fundamentals data in a fraction of the time traditional oil supply and demand analysis takes.

Speed and accuracy are what, according to OilX’s founders, makes the platform unique and these two features also highlight the top priorities of modern-day traders generally. Yet this is only a nascent market with a huge potential.

As OilX’s chief executive Florian Thaler told Oilprice, “Theoretically, AI-enabled solutions can be found everywhere in a trading organisation, from front to middle to back office in trading operations. Ranging from analytics, trade execution, risk management, HR. We believe that the change is coming from a series of small, highly focused and specialized solutions which – when put together – form a comprehensive solution.”

But AI is encroaching on traditional practices in price forecasting as well. This is hardly a surprise given one of the main advantages of algorithms over humans is in the superior predictive capabilities of the former.

Related: Oil & Gas Discoveries On The Rise As Oil Majors Dive In

"Price suggestion has clearly become a key factor [for AI] where for large trades and complex derivatives it used to take a while to price trades," a senior Citi executive told S&P Global Platts at an industry event last November. AI is already helping traders make better decisions based on price forecasts made by the algorithms, Sandeep Arora said.

And it goes beyond just price forecasts. Artificial intelligence is also being used to help humans learn how to better predict prices.

"We are not so much interested in predicting prices, we are interested in developing better theories that can help us make better predictions of prices," said the head of machine learning Marcos Lopex de Prado at the same event. In other words, machines are not replacing people, at least in the price forecast field, but potentially helping people become more accurate in their price predictions.

What’s in store for this nascent segment of the energy industry for the future? Probably bigger and better things as tends to happen with every technology that has proven its worth for an industry. Thanks to the advantages and benefits it offers, AI technology will likely spread to more commodity markets, Thaler said.

In that, the digital newcomers will continue to draw on the established expertise of the energy industry to come up with better trading decisions rather than trying to confront and overpower it.

“In terms of evolution,” said Thaler, “we see all commodity markets to move further up into the direction how we see gas and power markets trading today.”

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News