It was about time big data entered the lives of Big Oil. Yet it’s not happening exactly as expected. Oil companies are not making a mad dash to collect and process unstructured data in order to make sense of it and use it to expand or improve their business. No, it’s individuals and startups that are leveraging the potential of these unstructured data to supply it in a structured and useful way to oil traders.
The oil industry is notoriously opaque, especially those parts of it that are grouped in the Organization of Petroleum Exporting Countries. Iran does not release information about its tanker loads, for example. China does not release updates about its oil reserves. Yet this is information that, like the EIA’s weekly petroleum updates, can push prices up or down very quickly.
So far, there have been a few large providers of these data, such as Bloomberg and Thomson Reuters. Now, there are startups popping up all over the place, using algorithms to collect and make sense of shipping data, tanker tracking info, news, reports, and customs data, writes Georgi Kantchev for the Wall Street Journal.
One of these newcomers is Kayrros, which says its mission is to enable smarter investment decisions in the energy industry. The company says it combines analysis of satellite images and social news with financial and technical data to complete this mission, using data science, machine learning, and advanced mathematical models.
Another startup, Vortexa, says on its website that it is helping traders—large and successful ones—to beat their rivals by providing them with real-time market data on oil flows. The company says it collects information from billions of data points and hundreds of sources and interprets it by using artificial intelligence.
In short, Kayrros and its peers are doing what the oil industry does, only with data instead of crude oil and gas. They explore for it, then extract and process it, and then they turn it into a refined product that fuels, in their case, informed decisions.
The proliferation of these new data-crunchers highlights two things. One, how far technology has gone in the last few years, making it possible for all these massive data to be gathered, processed, and interpreted in a meaningful way. And two, what hunger there is among traders and investors for reliable oil data.
Oil is the most traded commodity in the world. It is likely that it will continue to be so in the observable future. These trades are based on information and there is too often not enough of it or it is unreliable. And even unreliable information, such as unconfirmed reports or a short remark from an oil official from OPEC, for example, can move prices up or down. Related: Is The U.S. Getting Left Behind In The Renewable Race?
The hunger is for abundant and reliable data and these companies—and several million of individuals united on Twitter by the hashtag #OOTT—are providing it. The #OOTT story is quite fascinating, actually. One man from Sweden started it all. Samir Madani started mining oil data for his own trading purposes: the large data providers are not cheap. Soon, the enterprise grew thanks to Twitter, where Madani created the Organization of Oil Trading Tweeters, or #OOTT, as a way of bringing together individual traders like him and relevant oil information. As anyone who follows Madani on Twitter knows, Madani lives, eats, and breathes oil. Madani, along with Lisa Ward, has also created a groundbreaking tanker-tracking website, TankerTrackers.com, which offers free tanker data to anyone interested--their only request is that the data, if published, is credited.
The power of this data should not be underestimated by the industry. Traders are hungry for this data that has until now played hard to get, but interest in the data from the website—the only free one of its kind—is growing at a rapid pace. This website is the first in a new way of doing things, and the oil industry will have to adjust to this new trend as information is now, more than ever, at-the-ready for traders, and sentiment will take a backseat to facts when it comes to making trading decisions.
So, the world of oil is changing in more ways than just new production technology and another OPEC deal. The world of oil has seen the light coming from big data. While the industry itself must still catch up with the bigger big data trend, those trading with their products are ahead thanks to the influx of more affordable and even free information resources.
By Irina Slav for Oilprice.com
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