How AI Could Upend the Secretive World of Fuel Trading
Strategic Petroleum Reserve Falls to Lowest Level Since 1982 The fuel trading market is expanding from an established group of specialized desks at oil majors, commodity trading houses, and refiners to AI-assisted trades.
AI could either make the sometimes opaque fuel trading a level playing field for many new entrants or break the market by overcrowding it in some trades, as Reuters columnist Clyde Russellnotesin a recent commentary.
The AI boom and the race to offer and receive “actionable insights” in seconds are equally tempting for the developers of the technology, the commodity analytics firms, and the customers.
Some commodity insights providers have started to offer AI tools to help their customers spot opportunities in the fuel trading market.
This momentous change comes at a time when global fuel markets are so tight that crowded trades recommended by similar AI-generated “insights” could further distort the markets of some refined petroleum products in some regions.
It is too early to say if AI would lead to opening the fuel trading industry to a much larger pool of participants than the legacy trading desks at refiners, oil majors, and commodity trading giants.
These groups of traders could increase their advantage over new entrants by using AI to collate information.
Or, alternatively, AI could become so widespread in the fuel trading business that it could give new participants a level playing field.
Last year, “many players started their AI journeys while continuing to invest in data and advanced analytics.
As these journeys are being implemented, there is growing conviction among industry players that AI could profoundly transform trading organizations,” analysts at McKinsey said in areportearlier this year, just as the Iran war began and took the energy markets by surprise.
The analysts expect a new era of market volatility to occur in much shorter cycles as geopolitics is changing trade patterns.
McKinsey expects three business trends to accompany the new era of market volatility: higher market consolidation, the AI transformation, and a growing appetite for investment in trading capabilities, which would lead to “higher levels of opportunity and risk management as well as new entrants.” “In the next five to ten years, AI could dramatically change how trading organizations will look from the inside, with human and AI agents working hand in hand, not only achieving outcomes more quickly but also with lower costs,” McKinsey’s analysts wrote.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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