Register

Peak Oil is You


Donate Bitcoins ;-) or Paypal :-)


Page added on May 23, 2017

Bookmark and Share

The Rise of the Amateur Oil Sleuths

Business

On a recent Sunday evening, Samir Madani had dinner with his family in suburban Stockholm, did the dishes and put his two children to bed.

Then he opened his laptop and started crunching U.S. oil import data late into the night.

Mr. Madani, a technology executive who trades and researches crude as a hobby, is part of a growing group of oil sleuths who have sprung up to sate the market’s voracious appetite for data and intelligence.

“So much of oil data is hidden and we’re trying to make it accessible,” said Mr. Madani, who runs a free oil data website from his house. “Besides, there’s so much drama in oil.”

Dramatic gyrations in the price of oil in the past three years have boosted demand for such services, intensifying competition in a market that for years had been dominated by governments, oil companies and a handful of big data providers.

Oil Sleuths

Oil data gatherers use a variety of technologies to match the market’s voracious appetite for statistics and scraps of intelligence.

Satellites
• Companies use satellites to monitor oil tankers as they criss-cross the seas
• That helps them reveal the location of Iranian oil tankers or how congested major oil ports
• Satellites which can deliver more frequent imagery than traditional satellites

Infrared cameras
• Louisville, Ky.-based Genscape uses infrared cameras to measure the level of stored oil
• Those cameras are mounted on helicopters that fly around tanks around the world
• The market-moving data is usually released a few days ahead of government statistics

Computer algorithms
• Oil data firms use computer programs to analyze reams of data to come up with forecasts for key oil numbers
• Input sources include: satellite imagery, customs databases, shipping records, social news
• The data is then distributed via online portals featuring charts and live tanker tracking maps
Source: the companies; staff reports

The new entrants include both amateurs armed with an internet connection and a Twitter account, and professional services using shoebox-sized satellites and sophisticated computer models. They are crunching data on everything from Middle Eastern exports to U.S. drilling. Such statistics often move oil prices as they predict government releases on crude inventories or cover data black spots such as Chinese stockpiles and Iranian tanker movements.

With the proliferation of data sources, the oil industry is catching up to other sectors. Retail and commodity investors, for instance, have long had access to a wealth of sophisticated information on things like store traffic and crop yields. But the free-fall in the price of oil—from more than $100 a barrel in 2014 to around $50 today—created new trading opportunities for hedge funds and day traders.

When Doug King started the Merchant Commodity hedge fund at RCMA Asset Management in 2004, there were only a few outside data sources, he says. “We used to do our own data crunching by hand, it was a simpler time,” said Mr. King, who now subscribes to several data services.

“The oil data industry has exploded,” said Mr. King, chief investment officer at RCMA.

At least three new oil data services companies are launching this year.

One is Kayrros, a Paris-based startup due to open for business in June. It aims to use computer algorithms to analyze satellite imagery, financial data and social news to come up with detailed estimates and forecasts for key oil numbers, says Antoine Halff, a founding partner of the firm.

“A decade or more ago, it used to be people with binoculars sitting in a hotel watching tankers move in and out of the port,” said Mr. Halff, who is also a senior researcher at Columbia University’s Center on Global Energy Policy.

A popular service such firms offer is to track where oil tankers are going. That gives, for instance, insight into how much crude that members of the Organization of the Petroleum Exporting Countries are exporting after their deal last year to limit supply.

Another new entrant, Vortexa, promises real-time tracking of more than 94% of all oil cargos globally. The firm was co-founded by a former head of trading technology at oil giant BP PLC.

Paris-based Kpler has 19 data “engineers” spread across offices in France, Singapore and Houston who use sources like shipbrokers and customs data and tiny nanosatellites, which can deliver more-frequent imagery than traditional satellites.

Crude oil storage tanks from multiple companies including in Cushing, Okla.

Crude oil storage tanks from multiple companies including in Cushing, Okla. Photo: GENSCAPE

Oil upstarts like Vortexa and Kpler are moving onto the turf of more-established players. Financial data companies like Bloomberg LP, Thomson Reuters Corp. and the commodity market information provider Genscape Inc. have been offering oil data such as tanker movements and production surveys for years. Reuters and Bloomberg compete with Dow Jones, the publisher of The Wall Street Journal, on some services.

Services like Louisville, Ky.-based Genscape cost up to several hundred thousand dollars a year, depending on the size of the customer and the data package.

Such hefty price tags have been driving independent traders like Mr. Madani to look for data themselves.

Mr. Madani turned to Twitter. A year ago, he created the #OOTT hashtag, which stands for Organization of Oil Trading Tweeters, to collate posts about oil news and publicly available data. The community quickly grew, with tweets featuring the hashtag reaching more than seven million accounts in the first two weeks of May, according to information provider Klear.

Mr. Madani then started crunching oil data from publicly available sources like free tanker-tracking websites and government statistics. Mr. Madani used a shared Google spreadsheet to publish his findings, and that later grew into TankerTrackers.com, a free oil-data website. He says he doesn’t plan to charge a subscription as his website is aimed at independent traders who often can’t afford professional services.

“We’re looking after the average Joe & Jane,” said Mr. Madani who routinely stays up until 2 a.m. trying to estimate OPEC members’ compliance with the group’s deal to cut production. “We’re all news and data junkies.”

Executives at some of the incumbent providers say they offer more data than the upstarts do, but that they welcome the competition. “The more eyes we have watching the market, the more transparent it gets,” said Matt Smith, director of commodity research at ClipperData, a New York-based oil data provider.

Lee Saks, New York-based oil futures trader who often tweets using the #OOTT hashtag, says while that such free websites don’t have the resources of paid providers and can make mistakes, “they are on point a lot.”

“Free services can be a decent substitute for paid subscriptions,” he said.

WSJ



3 Comments on "The Rise of the Amateur Oil Sleuths"

  1. rockman on Tue, 23rd May 2017 2:59 pm 

    Very interesting. About time someone tried to getter a better handle on the accuracy of the numbers tossed out by state oil companies. But they do get a little carried away with their own hype: “Those cameras are mounted on helicopters that fly around tanks around the world”. Maybe some countries buy I doubt choppers are flying into restricted air spaces in any OPEC country. At least since 9/11.

  2. CIA-MOLE on Tue, 23rd May 2017 9:47 pm 

    The theory goes that earth is a burned out star. Some threshold was reached and the fire was doused. The planets are mere feeding stock for the next sun.

    There would be some gravitation disturbance and the sun is dislodged from its lagragian space and another takes its place.

    this is how I explain the abundance of hydrogen complexes on earth.

  3. Anonymous on Wed, 24th May 2017 4:35 pm 

    Genscape does some cool stuff. They can estimate natural gas flows into Mexico from Texas based on IRing compressor station.

Leave a Reply

Your email address will not be published. Required fields are marked *