The west’s energy watchdog has recently indicated that global oil prices could continue to fall into 2015 despite the expectation that some unconventional oil production could become uneconomic at prices under $80/b. The IEA also went as far as to suggest that oil markets were entering a “new chapter” in their history.
If the IEA is correct in that a return to higher prices in the short term seems unlikely, how does that impact the need for CTRM system and related services? Does the recent drop in oil prices, that in some circles is being called a collapse, justify the continued use of spreadsheet by many of the new entrants to the North American Shale revolution?
The reality is that nobody can accurately predict the future price of oil 100% of the time. The truth is there will be volatility in the energy markets, and with volatility the need for more information and greater control of an organization’s trading data is critical.
While some would predict that with lower oil prices the smaller players that trade in the North American market, would be justified to ignore the needs for adequate systems to protect their investors. The opposite is actually true, given the fact that there will be price volatility and continued uncertainty in energy markets in the future, the need for adequate trading and risk management systems is even greater than before.
With high-energy prices it can be argued that there was complacency with regards to control around energy trading and marketing for the new entrants of the shale revolution. Now with prices heading the other way, greater attention to those trades and contracts is required.
- Posted by Doug Erb
- On December 9, 2014