Entries for ' oil'

One month ago, U.S. oil traders weren’t paying much attention to the healthcare debate in Washington. They were more concerned about refinery operations in the Gulf, growing tension with Syria, and hundreds of other factors that would likely affect oil prices. After all, what were the odds that the U.S. government would actually shut down?

On October 1, everyone found out. Non-essential employees were sent home, projects were put on hold indefinitely, and non-mandatory spending was cut off. Suddenly the world’s largest oil consumer needed a lot less oil. Market participants who hadn’t accounted for the possibility of a shutdown, or come up with a contingency plan, found themselves exposed. And even as the shutdown appears likely to come to a close; uncertainty looms large as traders await the release of inventory data.

It is clear that the only way to succeed in today’s oil markets is to rely on new technology. No series of spreadsheets can account for all of the variables that threaten to dissolve margins and eliminate profits. Triple Point’s energy trading and risk management (ETRM) enterprise software, Commodity XL, stands alone in its ability to mitigate risk by providing comprehensive analysis throughout the oil market value chain. Learn more about Commodity XL for Oil.

Triple Point Rio Office Triple Point officially opened its Latin American headquarters in Rio de Janeiro this week with a special reception hosting Vale, NORSUL, and other leading companies that rely on Triple Point’s Commodity Management solutions.

The new office enables Triple Point to service its rapidly growing customer base throughout the region. Latin America has always been an important market to Triple Point, with Petrobras becoming a customer back in 2000. 

The Latin American economy is very commodity-driven because of rich natural resources including coffee, sugar, oil, and iron ore. The Brazilian economy in particular is the largest in the region, and the country is also one of the world’s largest commodity exporters.

In recent years, the commodity markets have become very volatile, with companies struggling to mitigate exposure to market swings. Because of these conditions, effective risk management is more important than ever, and Triple Point has seen interest in its commodity trading and risk management  (CTRM) solutions increase significantly throughout Latin America.  

The energy, mining, agriculture, and consumer products (CP) industries within Latin America represent big opportunities for Triple Point because Triple Point’s solutions provide extensive functionality that addresses the unique challenges of each industry. Learn more.

Oil Trading SolutionThe gas in our cars, cleaning chemicals in our cabinets, and reusable cups from which we drink our coffee or tea all have ties to the crude oil industry. As feedstock for a wide array of goods, crude oil and crude products are among the most widely traded commodities in the world. The market attracts diverse participants; however, many of the challenges faced are universal.

CommodityPoint’s latest white paper, “Global Oil Markets- Increasing Uncertainty and Risk,” highlights several of these challenges and concludes that now is the time to invest in an advanced energy trading and risk management (ETRM) software solution to combat rising volatility.

This white paper discusses how the political unrest affecting many of the world’s crude-producing regions is having a direct effect on oil supply. Tensions in the Middle East threaten to shut down the busiest port in the region, which could interrupt the delivery of 17MMbbl/day. Should this situation come to fruition, market volatility will be further exacerbated, and those companies that are not properly equipped to manage it will suffer.

While the threat of a continued reduction in crude supply looms, crude demand continues to grow each year. CommodityPoint’s paper suggests the only way to effectively navigate the market fluctuations caused by scenarios such as this is to implement a sophisticated trading solution that can not only capture, manage, and value trades and hedge positions; but that can also model the entirety of the physical operations of market positions. Read the paper now and find out why it’s imperative to have an ETRM solution such as Commodity XL™ that provides an integrated, real-time view of physical and financial exposure alongside operational, credit and regulatory risk exposure.

Download the CommodityPoint white paper

There have been several recent announcements from Delta Airlines related to jet fuel and oil trading.

According to Reuters, Delta Air Lines Inc. reported a second quarter loss because it took $561 million in charges for fuel hedges.  Part of the loss was taken for mark-to-market adjustments on open hedge contracts. 

It appears that Delta has chosen not to apply FAS commodity hedge accounting treatment.  Many of the news reports called these derivative purchases “bets” when in fact they are hedges that reduce risk. 

If Delta used hedge accounting it would match the loss of open fuel derivative contracts against future jet fuel purchases and not show the loss in the current period. Hedge accounting is extremely complex, and an advanced, auditable software system is required to support the adoption of these procedures.

Separately but related to managing fuel cost and risk, Delta announced that it completed its acquisition of the Trainer Refinery in Pennsylvania through its Monroe Energy subsidiary.  Delta will move jet fuel from the refinery to its hub airports in the Northeast.  Additional refined products such as gasoline and diesel fuels will be traded for jet fuel in other parts of the country. Delta spent about $12 billion on jet fuel in 2011 and expects to serve 80% of its domestic jet fuel needs from the Trainer refinery and related deals.

Delta is the first airline to own refining capacity. It will be interesting to observe if other airlines follow suit and move to vertically integrate their energy supply chains. 

Supplying a refinery with crude oil and trading products requires sophisticated energy trading and risk management (ETRM) software.  With volatility seemingly increasing daily in the commodity and crude oil markets, it seems prudent for Delta to invest in a hedge accounting and oil trading and risk management platform.

Four years ago Triple Point acquired INSSINC, the leading commodity hedge accounting software solution, and integrated it into its energy trading and risk management (ETRM) software solution.  At that time, Triple Point recognized the need for an integrated commodity management platform that seamlessly integrates all key risk areas.

The new volatility reality demands that all industries with exposure to commodities and energy review their current risk systems to ensure they are appropriately protected. 

Asia PacificAccording to McKinsey, Asia’s global middle class is likely to grow by three billion people over the next 20 years, and China and India are doubling per capita incomes by approximately 10 times the rate and 200 times the scale achieved by England’s Industrial Revolution in the 1800s.

This massive middle class expansion has fueled demand for commodities such as oil, coal, and wheat. More and more Commodity Management companies dealing in the Asia Pacific (APAC) region are realizing that in order to ensure price volatility doesn’t diminish profitability, they need advanced technology solutions such as Triple Point’s Commodity XL™ to optimize supply chains, improve decision-making, and minimize risk.
 
In 2011 Triple Point experienced record growth in APAC, with year-over-year revenue for the region increasing 75%. APAC customers include China National Offshore Oil Corporation (CNOOC) Limited, China’s largest producer of offshore crude oil and natural gas, as well as Bayin Resources, Dhanlaxmi Bank, Marubeni, Merit Chartering, and State Bank of India. Triple Point has also significantly expanded its staff in Asia Pacific, growing from 250 to over 400 employees, in order to ensure full support for the company’s growing customer base. In addition, Triple Point extended its Asia Pacific footprint with the acquisition of QMASTOR, the premier provider of mining software solutions, headquartered in Newcastle, Australia. 

Read more about Triple Point Commodity Management solutions.

Events

Procemin 10th International Mineral Processing Conference

October 15-18, 2013 | Chile

XXV Brazilian National Meeting of Mineral Treatment and Extractive Metallurgy (ENTMME)

October 20-24, 2013 | Brazil



Opinions expressed on this blog are those of its individual contributors, and do not necessarily reflect the views of Triple Point Technology, Inc.