Digital Petroleum Week (DPW) is a global gathering that connects key players in the commoditech ecosystem.
In the inaugural event, which took place virtually in February during IP Week, attendees gained insights into some of the most transformative developments in the oil tech sector. Industry leaders, corporate executives and technology startups from the commoditech sector shared their views on where commodity trading is heading.
In this article, we highlight five takeaways and special insights from our polls, attained during the conference.
1. The oil trading industry recognises the impact that digital transformation will have
As trading itself becomes digital, the infrastructure around it also needs to adapt to accommodate the needs of traders in the best possible way. In short, this means that traders everywhere require platforms where they have access to data and predictive analytics in order to make informed trading decisions. Besides the minimum of data and analytics, they also require stable, secure and user friendly platforms to optimise their own trading processes as well as communication with sellers and further stakeholders.
Digitalisation is a solution to one of the industry’s main issues, the opaque nature of the physical oil industry, as voiced by BCG’s Managing Director, Antti Belt, in his presentation at Digital Petroleum Week 2021. The wide ranging differences found in physical oil make it difficult to organise, standardise and finally optimise its trading processes. Fortunately, we can now leverage the appropriate technology, and so there is nothing left standing in the way of total digital transformation in the sector. This would in turn allow the move of physical oil into hyper-liquidity, another benefit mentioned in this presentation. Additionally, the sector is likely to be eventually flipped completely with the speaker predicting traders to go from being supported digitally to finally having the digital medium leading through machine intelligence in the not so distant future.
2. Live, accurate & multi layered data is essential to maintain an edge as a trader in the transitionary period
In an age where everyone with a basic Internet connection can access a wide range of information, what matters now more than ever is the quality of data. The data also needs to be easily digestible as well as properly contextualised. In practice, this means that the data needs to be vetted, layered and combined from multiple sources to give the trade the widest possible view and so the greatest edge. Additionally, in order to keep up with the speed of trades, the data supplied needs to be quite close to live if not live. These prerequisites are essential for modern stakeholders in commodities, not only to survive but to prosper and grow.
3. Due to increasing digitalisation, secure and stable platforms are needed to guarantee, maintain and safeguard the edge of the modern commodity trader
As the internet increasingly reaches even the most remote parts of the earth, the risk of fraud and security breaches rises. Consequently, the provision of platforms that are secure and stable is essential as it provides a space in which digital commodity trading and its surrounding processes can happen quickly and efficiently. Another point to mention is that the high security threshold of such platforms also protects the edge of the modern trader. Meaning that the likelihood of breaches of privacy or data leaks is lower as these platforms centralise the trading of the user and employ multiple layers of protection.These measures in turn create a safe environment in which the modern trader can develop and use his edge to prosper in the industry.
4. Advanced monitoring of the flow of commodities through the leveraging of spacetech and other tech is needed to supply and support the sector’s digital transformation
One of the most reliable ways to guarantee high quality data is through the leveraging of satellite technology. This is done in order to specifically measure physical levels of oil and their flow on a global scale at an unprecedented speed. Only with data like this can the digital transformation be continuously supplied and subsequently supported. An example of this already in practice is OilX’s use of Geospatial Insight’s TankWatch Cushing service, which is independently integrated into the OilX platform. It supplies users with updates multiple times within a week, delivering previously invisible insights about the supply of crude in each storage facility, worldwide.
5. In the globalised world, transportation is connecting trade. Shipping platforms in all its facets are needed to optimise trade and the exchange of goods by sea
The vital nature of shipping and its key role in trade can no longer be relegated to older more inefficient methods. Platforms that go about creating the centralisation and organization of all processes involved, whilst including all stakeholders such as charterers, ship brokers, ship owners, operators and commodity traders for their necessary input, are essential not only in a globalised world to improve the efficiency of global trade.
Poll insights from DPW21
Lastly during DPW21, we polled attendees on the impact of digital transformation on their organisation and how digitally advanced they consider their company to be. 80.4% of the participants believe that the digital transformation will have a huge impact on their company, 15.2% a neutral impact and only 4.3% believe that it will have little impact.
When we asked our attendees in what stage of the transformation their companies are currently in we got the following results shown above, with 39,5% being Early adopters, 37,2% Fast followers and 23,3% being Slow Adopters. This response shows us that a number of attending companies are already embracing the digital shift. A glimpse of warning came from Oliver Wyman for the ‘fast followers’: these organisations are often suffering from a 'death by thousand PoCs (proof-of-concepts)’ and are thus unable to institutionalise digital capabilities in the long run and to make the digital transition for good.
In conclusion, commodity trading will move and completely transition into the digital sphere in the foreseeable future. In order to navigate in this new age and prosper, the stakeholders need to be armed with key tools. Secure, stable and efficient platforms that cover all facets in the sector need to provide high quality data rapidly, in order to help optimise processes and increase efficiency.