Oil Prices and the Impact to the ETRM Software Market

With oil exporters failing to reach agreement to freeze production in support of higher prices in Doha, Qatar recently, I went back and rescanned BP’s Energy Outlook 2016 edition. I wanted to remind myself of BP’s view of the market over the next 20 years. It contains some very interesting points that I’m going to post here for our readers that haven’t seen the report. The report has a base case (which I will use) and alternate cases – slower global GDP growth, faster transition to a lower-carbon world, and shale oil and gas having even greater potential.

The BP Outlook is based on market factors and many analysts see the lack of a Doha agreement as a good outcome.

"We can see it as the rational decision that there has been no decision (in Doha).

It has taken 18 months to start to rebalance the oil market with falling non-OPEC production in a variety of countries and demand showing signs of recovery which means we are getting there, we're getting to a new equilibrium.

So why delay it with a self-defeating rally that would bring an oil price to above $40 a barrel too quickly and one that would incentivize producers to ramp back up production?"

— Michele Della Vigna
co-head of European Equity Research at Goldman Sachs
as told to CNBC April 18, 2016

Points from BP’s Energy Outlook:

• One of the items in complete agreement with the Goldman Sachs analyst is that the oil market gradually rebalances, with the current low level of prices boosting demand and dampening supply. The real question is how much longer will it take for the market to rebalance?
• BP expects world GDP to more than double with the energy requirement to support growth rising by 33%. Needed energy growth is less than GDP due to unprecedented gains in efficiency. A third growth from the current level is still a very large increase in energy usage over the next two decades.
• Renewables grow rapidly in the 20 year period, but fossil fuels will still be 80% of total energy supplies.
• Gas is the fastest growing fossil fuel supported by strong supply growth, particularly of US shale gas and liquefied natural gas (LNG), and by environmental policies. Learn more in "Supporting the LNG Supply Chain with ETRM Software."
• Oil also continues to grow by almost 20 Mb/d driven by increasing use in Asia.
• The rate of growth of carbon emissions more than halves relative to the past 20 years, reflecting gains in energy efficiency and the changing fuel mix. But emissions, even with the declining rate, continue to rise, suggesting the need for further action.

Eka's ETRM and CTRM Software Can Help

In discussions with our energy customers we know this has been a difficult period. A lot of unknowns, complexity, and volatility to navigate. Our clients tell us that Eka’s ETRM software enables energy companies to manage their business in these hard times. Our solutions deliver greater efficiency in cost cutting measures and better effectiveness in decision making with the use of analytics.

»»» Download brochure on Eka's ETRM software platform. «««

Eka's next-generation ETRM software platform manages the entire lifecycle of crude and refined products including purchase, refining, blending, storage, transportation, sales, distribution, and trading. Our InSight CM is a fully integrated multi-commodity ETRM software platform for crude & refined products, natural gas, natural gas liquids (NGL), liquefied natural gas (LNG), power, coal, and biofuels covering all aspects of a transaction lifecycle including trading, risk, processing, scheduling, logistics, and accounting.

With exponential growth in internal and external data to sift through, it is also important for these companies to have advanced analytics to make the best decisions. Energy businesses need to make complex, strategic decisions using both real-time and historical data from many sources, both market and operational. Our Commodity Analytics Cloud is an advanced analytics solution that has been built with the specific needs of commodity companies in mind. The platform delivers industry-specific apps that cover P&L, risk, supply chain, and procurement. Energy companies will benefit from the platform's advanced visualization and statistical optimization to make the best scheduling decisions and improve collaboration.