Latest News from the Tallarium team

Bullish price action in July across the barrel with flat price and product cracks marching upwards

Stanislav avatar
Shared by Stanislav • July 30, 2023

We wrote last month about the disconnect between crude flat price and the stellar performance in clean product cracks. This month crude responded to the strength and the ongoing chatter of accelerated Chinese crude stockpiling, with Brent rallying $10/bbl up to $84/bbl.

While crude rallied, gasoline and diesel markets soared higher to make new year to date highs. Gasoline remains the best performing part of the barrel, with the August Ebob Crack jumping by $10/bbl to trade above $30/bbl.

Distillate spreads and cracks have also spiked, led by Eastern strength. All in all this is keeping margins at very attractive levels for refiners as we enter the heart of 3Q.

Macro bears will continue to beat the drum, but product strength and the recent IMF global growth forecast upgrade to 3.0% from 2.8% should make them think twice in terms of the balance of year expectations for global oil demand. Perhaps further oil flat price appreciation is required to put the brakes on demand.

Light Ends

Gasoline markets remain very very strong. Aug/Sep EBOB is trading +45/mt and Aug/Sep 92R spreads are over $3/bbl backward. The strength is relentless. Naphtha remains dislocated and weak but July saw cracks begin to rebound from the year-to-date lows and there seems to be some support in timespreads at around -$2/mt in the front months.

August EBOB Crack


Keen observers of the price action in distillate differentials through month of June will have seen the signs of strength that have since translated into soaring timespreads and cracks across the price centres.

The resurgence in distillate values seems to have been Eastern led, with August East/West ticking up from -$16/mt to -$10/mt this month before the ICE GO screen took off to make ARA the strongest price centre.

As has been the theme for a long time, global distillate stocks are running at record lows so it is inevitable that the biggest import hub, North-West Europe, will have to intermittently jump in value to attract re-supply.

Distillate remains a very difficult market to short, particularly with hurricane season around the corner and Europe looking to build some stocks before a winter without Russsian barrels.

Aug/Sep Sing GO

August GO East/West

Fuel Oil

Not wanting to be left out, fuel cracks also performed in July with 3.5% FO Crack rallying $3/bbl up to -$6/bbl over the last couple of weeks.

Crude in tug of war with gasoline and distillates: June bid/offer and liquidity levels for main market movers

Stanislav avatar
Shared by Stanislav • June 26, 2023

Flat price crude faced significant pressure in June with WTI and Brent struggling to stay above $70/bbl and $75/bbl respectively.

The underwhelming performance in flat price is in line with a bearish macro picture and a weak crude physical market, reflected in continually suppressed DFLs and talk of plentiful physical offers in the Singapore MOC. Clean products bucked the trend, with prompt ICE gasoil cracks and EBOB cracks chasing each other higher in recent weeks.

There is now a tug of war taking place between strong gasoline and diesel markets and crude, which cannot seem to sustain a rally.

All eyes now on Q3: refinery runs seasonally take a big leg up over this period, so the question will be whether this will be enough to clear the crude overhang.

July EBOB Crack

July GO Crack

Light Ends

Naphtha cracks continued their epic fall from grace through June, sliding for a third month in a row. Jul/Aug Nap NWE has fallen to -$5.25/mt. At these levels of contango, traders have incentive to convert tanks in ARA from other products to store Naphtha, but nonetheless market remains desperately weak with July cracks dropping at least $6/bbl down to -$15.00/bbl during month of June.

Jul/Aug Nap NWE


The market seems to have unanimously concluded once again that stocks are too low in all price centres for spreads to weaken materially. June saw spectacular performance in OTC distillate markets with traders rushing to cover any Q3 shorts. Whereas some traders were positioning previously for negative 10ppm barge diffs in ARA, sentiment has shifted back again to an expected strong second half of year. All eyes on physical markets to see how things perform as Asian refinery runs pick up in Q3. There could be volatility in store for distillates, as macroeconomic concerns put the demand side of the equation in focus.

Fuel Oil

Fuel Oil cracks, performed well in June. July 3.5% FO Crack traded from -$12.00/bbl up to around -$7.00/bbl, where Tallarium data shows there are multiple offers stacking up.

May intraday bid/offer and liquidity levels for main market movers

Stanislav avatar
Shared by Stanislav • May 22, 2023

The oil complex stumbles along despite gasoline’s kicking and screaming.

The oil complex has remained under pressure in May, despite producers’ best efforts to buoy prices.

Production cut announcements have not done enough to reverse sentiment around the negative macro picture. Brent is now trading in the mid $70/bbl range, while WTI is edging lower towards $70/bbl.

Various reports have suggested that Russian product and crude exports are continuing to find new homes, primarily in Asia, and this has led to price stability and in some cases weakness in clean products globally.

A look at OTC markets reveals weak signals in prompt crude with June DFL trading near flat, down from $+0.40/bbl on 1st May. Naphtha has made a significant correction lower, having been the star performer in Jan and Feb this year. Gasoline has bucked the trend and has been the best-performing part of the bbl in May.

Light Ends

The Naphtha weakness in April has carried through into this month with selling getting more aggressive. Cracks have continued their downward trend and, significantly, the front month time spreads (Jun/Jul) in NWE Naptha and MOPJ traded in contango earlier lask week, which reflects traders’ bearish sentiments around expected feedstock demand from petchem manufacturers in the East.

Gasoline has faired a lot better with Europe in particular performing very well in May, resulting in a parabolic jump in the June Gas/Nap. June Ebob cracks have jumped at least $4/bbl in May on the back of strong Ebob spreads and weaker crude.

Nap NWE spread trading at a low of $-1.75 on Monday 15th May.


Diesel seemed to have found a bottom earlier this month when spreads dipped into negative territory. Since then a mild backwardation has re-established in most markets and gasoil cracks have drifted higher. However, the signals in the OTC markets are not so encouraging for bulls.

The prompt 10Cif Med is trading between +$5/MT and +$7/MT which supports reports of Russian ULSD exports finding lots of homes in Turkey and North Africa since the EU import ban came into play. Spreads and cracks could eventually face more pressure as levels have climbed a decent chunk from the lows.

Fuel Oil

Fuel has stopped climbing but has remained supported. The June 3.5% FO crack has traded lots at around $-12.00/bbl, as captured by Tallarium data. Since the 9th of May we have recorded 315 trades at a weighted average price of -$-11.96/bbl in the June Crack.

How gasoline traders can leverage automation to gain a competitive advantage

Stanislav avatar
Shared by Stanislav • May 16, 2023

Gasoline markets are some of the most unpredictable and complex in the commodity space. Market volatility, changing regulation and increasing competition mean every cent counts. This creates both challenges and opportunities for gasoline traders.

Because the majority of gasoline contracts are traded in opaque OTC energy markets, accessing pricing information means having to shop around for broker quotes to get a view of the market. Gasoline traders get around 5,000 broker quotes a day coming in from voice, chat and messenger apps - still, separating the best numbers from the rest is a key challenge.

“We are overloaded with quotes across chat, voice and messenger throughout the trading day, but not all of the noise is useful.” - Gasoline Trader at Oil Major

Traders still have to manually process this firehose of quotes in a spreadsheet to assess where the opportunities lie. It is not only time-consuming and inefficient, the data is dependent on others which creates a liability in fast-moving and competitive markets. These legacy processes are being challenged as gasoline markets undergo significant change.

Unpredictability and changing market landscapes

The shift to renewables and uptick in electrical vehicles has created uncertainty at a macro level, with the balance of supply and demand liable to move location in line with adoption of these technologies. The regulation driving this change is also likely to shift supply and demand routes, making markets even less predictable globally.

Whilst OTC markets remain quite opaque, the overall increase in transparency and adoption of technology is serving to increase the competitiveness of these markets. Gasoline traders are under increasing pressure to obtain and execute on the sharpest numbers to be successful.

“There is no such thing as an ‘easy deal’. You need to ensure you are executing on the razor sharp numbers in these markets.” - Gasoline Trader at Large Bank

Automation provides a chance to increase bandwidth and manage complexity

Time spent manually compiling data is an opportunity cost for traders in such competitive markets. Our data shows traders can spend two hours more manually capturing and processing quotes for pre-trade decision making. This takes valuable time away from high level strategic decisions.

Automation provides an opportunity to free up bandwidth to focus on higher-value endeavours such as assessing fundamentals and building counterparty relationships. This is quickly becoming essential in such competitive markets. To gain a true edge however automation alone won’t be enough, gasoline traders need access to better data to manage market complexity.

“Having a view of the lighter fractions of oil is essential, but getting a view of these forward curves is a constant challenge.” - Gasoline Trader at Independent Trader

Many of the major gasoline benchmarks - such as USGC, ARA, Singapore - are only traded OTC. This means oftentimes getting a view of the market is only possible if you’re actively trading it.

To outcompete in gasoline markets, traders need to have a view of core benchmarks as well as adjacent markets. Understanding where important markets like Propane and Naptha are is key when computing blend components.

Gasoline traders can leverage solutions like Tallarium to automate price discovery and get a view of the wider market, without having to shop around and manage an influx of quotes. Not only does this allow them to track all the markets that matter to inform decision making, the aggregation of pricing information from the wider market gives insight not all competitors will have.

A view of Tallarium's pricescreen for Ebob.

Sharp curves that update in real time enable traders to rapidly identify dislocations in pricing

With curves moving around based on a number of flows at any given time, spotting bids that are too high or offers that are too low can be a challenge. This leads to suboptimal execution that can constrain a trader’s profitability. To solve this problem, Tallarium developed T-Curves - automated forward curves that deliver a view of the whole market.

T-Curves aggregate pricing data from across OTC refined oil markets and uses data science to deliver a live, accurate and objective view of where these markets are trading that updates in real time.

In addition to removing manual and time consuming processes, an objective view of where core and adjacent markets are trading gives gasoline traders broader and deeper market insights to inform decisions.

This is particularly valuable in gasoline markets where traders need to track a multitude of gasoline spreads and blend component forward curves. Leveraging such data provides an opportunity to find the sharpest number for execution across the market, and thus can deliver a significant competitive advantage.

Click here to request a demo and see how Tallarium can work for you.

April intraday bid/offer and liquidity levels for main market movers

Stanislav avatar
Shared by Stanislav • April 24, 2023

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Crude oil surged at the start of the month on the back of the surprise OPEC+ decision to cut production by 1.66 million bbls per day. Brent reacted to this news by climbing up towards $90/bbl, only to slip back towards $80/bbl in recent days. A look at OTC markets gives us some clues for the mid-month shift in crude sentiment. Gasoline, particularly in the East, has made a significant correction lower, with traders potentially eyeing the continued weakness in distillates and tempering bullish sentiment before the summer driving season. Crude traders now have a close eye on refining margins globally to evaluate just how much the weakness in clean products will dampen refiners’ enthusiasm to purchase crude when they come out of maintenance. With OPEC having taken such drastic action to bolster crude, bulls cannot now afford clean products to waiver over the coming months.

Gasoline and Naptha

A closer look at OTC gasoline cracks shows that the weakness in the gasoline complex likely emanated from selling in the Singapore pricing centre. 92R cracks endured a torrid start to the month with cracks gapping $3/bbl lower over the first three sessions of the month.

Despite a momentary recovery, by mid-month wholesale gasoline selling across all three major price centres ensued and we are yet to find a floor. Naphtha meanwhile has been rangebound between -$8.50 and $6.50/bbl, but well off the start of year highs.


Similar to gasoline, distillates have been weakest in the East. Singapore timespreads are now flirting with contango, while East/West has been trending lower. This weakness has translated into selling in Europe where ARA 10ppm Barge diffs were marching down from +$7.00/mt at the start of the month towards zero before OTC offers thinned out. This seems to be a floor for now as stock levels are too low for the market to get comfortable with contango in distillate markets.

Fuel Oil

Conversely to the clean complex, fuel oil has had a stellar April. This is one to watch and is offsetting the impact of clean product weakness on refinery margins somewhat, but likely not by enough to have any meaningful impact on the demand for light sweet crudes.

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March intraday pricing and liquidity levels for Light Ends and Distillates

Stanislav avatar
Shared by Stanislav • March 28, 2023
  • Crude faced a torrent of macro selling this month as the market de-risked in light of the fallout from SVB and the banking crisis.
  • Amidst this almost $10/bbl correction, clean products held up with significant rallies in cracks and spreads, suggesting product fundamentals remain tight and demand may in fact be improving in the lower flat price environment.
  • Gasoline has taken over the mantle from Naphtha and is now the star performer with Rbob, Ebob and 92R cracks all very well bid, as shown by Tallarium data showing offers thinning out through the 2nd half of the month.

Please note intraday Bid/Offer data uses box plots indicating:

  • The upper quartile and lower quartile price range
  • The maximum, minimum and median Bid or Offer

  • European distillate differentials and Gasoil spreads are running out of steam once more having rallied significantly since the carnage in February. With the recent collapse still very fresh in the memory of traders, holders of length will be wary of weathering another bout of weakness.
  • The April Gasoil crack remains range-bound but trending lower now. As Gasoline and Naphtha start to carry the margin, Gasoil may increasingly take a back seat.
  • The OTC markets gave an early signal for this latest Distillate corrections as the 10ppm CIF Med diffs came off sharply mid-month potentially on the back of cargo hedging. Gasoil can remain under pressure if the Med continues to trade in single figures.
  • There was a significant amount of Jet buying over the last week when Brent approached $70/bbl, which is suggestive of airline hedging coming back into the market after a long period of demise for Jet diffs.
  • Tallarium quote data shows that there were 4x as many bids as offers on the 21st of March for April Jet. This preceded a sharp rally in Jet diffs, however the market has eased at the time of writing.

Tallarium secures $1.6m investment from XTX Ventures and Reciprocal

Stanislav avatar
Shared by Stanislav • March 13, 2023

Energy market price discovery platform Tallarium secures $1.6m investment from XTX Ventures and Reciprocal Ventures

  • Investment will support ongoing product development for Tallarium’s energy market data and pricing platform
  • Brings the total funding raised to $7m

Tallarium, providers of unique trade analytics for price discovery in off-exchange energy markets, today announces that it has secured additional investment from XTX Ventures, the venture capital arm of leading algorithmic trading company XTX Markets, and Reciprocal Ventures, a venture capital firm.

The companies have provided a combined total of $1.6 million of new investment in Tallarium to fund Tallarium’s ongoing expansion as the ‘single source of truth’ for pricing in the opaque energy trading markets. This brings the total raised by Tallarium to date to $7 million.

Tallarium is helping to digitise energy trading markets

Based on the energy clearing house and exchange data from ICE and CME, as well as Tallarium’s own calculations, over 90% of energy contracts, representing over $7 trillion per annum, are traded off-exchange (actively transacted via messenger chat and over the phone). The industry has been one of the slowest to digitise, with energy traders still using Microsoft Excel as the primary tool used to record and analyse data. Some of the world's largest energy firms are forced to rely on these highly manual methods for risk management and valuation processes.

Using proven, robust and reliable methodologies, Tallarium’s platform automatically gathers and structures pricing information from broker chat messenger and voice conversations to create the industry’s first, definitive price discovery platform for the entire market. Its advanced data analytics provides a step-change in off-exchange energy trading, making manual data-entry and analysis obsolete, increasing efficiencies and helping traders to maximise the potential of every trade.

Commenting on the investment, Stanislav Ermilov, Founder and CEO of Tallarium, said: “Tallarium will help bring all the benefits of digitisation to energy traders, such as centralised pricing and access to increased liquidity, without asking traders to change the way they trade. Our technology empowers energy traders to trade more profitably by capturing more opportunities and helping them to manage and respond to market risk more effectively.”

He added: “We’re delighted to have secured the backing of key strategic partners such as XTX and Reciprocal Ventures, who bring with them deep domain expertise in data and capital markets. They will contribute their experience and invaluable advice to our team as we continue to grow and this additional funding will allow us to accelerate our development and scaling even further. We look forward to a long and successful relationship with our new investors.”

Mike Irwin, COO at XTX Markets, said: “As innovators in trading ourselves, we are always looking for partnership and investment opportunities in exciting companies making a real contribution to financial markets. We were impressed by Tallarium’s technology, its people and its focus on solving a real problem in energy market trading, by providing definitive product pricing information where none has existed before.”

About Tallarium (

Tallarium gives traders an edge by providing a ‘single source of truth’ for price discovery in off-exchange markets, offering energy traders the solutions and insights required to access more liquidity and maximise the potential of every trade.

Using proven, market-leading and reliable methodologies, Tallarium’s True Value Discovery (TVD) engine gathers fragmented pricing data from trader chat messenger and voice conversations to build the off-exchange energy market’s only definitive price discovery platform that works in real time.

Collating millions of data points across hundreds of products and spanning the views and sentiments of thousands of data sources, Tallarium enables traders to instantly grasp pricing dynamics within both their broker network and the wider market.

Tallarium’s SaaS offering makes data and analytics available to energy traders via Tallarium web, desktop and mobile device apps, as well as APIs. Built-in collaboration solutions allow the best energy product pricing data available anywhere in the market to be shared, maximising trading performance across entire teams.

Tallarium services a significant number of the top 30 most active players in their respective off-exchange energy product markets. Some of the largest energy companies in the world rely on Tallarium for energy market pricing data and analytics to enhance their trading outcomes.

For more information visit our website, follow us on Twitter and LinkedIn.

What is one of the biggest challenges OTC energy traders encounter every day?

Stanislav avatar
Shared by Stanislav • February 22, 2023

Over the past few years we have spoken to a broad range of traders in the OTC energy trading space to inform our product development at Tallarium. Across the more than 200 traders we engaged with, we saw one consistent challenge emerging time and time again: getting a view of the forward curve for a wide number of benchmarks.

As markets become more volatile and trading becomes more sporadic in response to macroeconomic news, there are major benefits to having fast and constant access to markets’ forward pricing. Such information arms a trader with the means to take advantage of trading opportunities and eliminate risk - whether that’s by better understanding market fundamentals, evaluating alternative, cheaper supply sources, or enhancing their hedging strategy.

Unlike markets that trade on an exchange however, there is no standardised and centralised platform in OTC markets where traders can easily discover all the necessary forward curves to inform trading decisions. To construct a good view of all the required forward curves currently, traders tend to do the following:

  • Copy and paste prices from broker end-of-day sheets in the morning and follow-up for price runs throughout the day to fine-tune their curves.
  • Manually tracking incoming quotes from brokers via voice and various chat apps and pasting those into Excel, which is a cumbersome and time consuming process.

Aside from the above method being labour intensive, it has limitations with providing a truly accurate and objective picture of the market. It is also extremely difficult to properly manage the volume of broker pricing - even when dealing with just a handful of brokers, it often still means a lot of valuable pricing information.

Furthermore, liquidity can be sporadic and constrained during certain market periods (see Figure 1). In these instances, traders have to ‘guesstimate’ curves based on available pieces of pricing data in adjacent markets or exchange quotes.

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Some products only have 10% total volumes traded on-exchange (e.g. Ebob gasoline and Nap NWE crack). It’s clear that exchange data won’t do much to solve the problem of forward price visibility in such markets.

If you’re trading markets that are totally off-exchange, you are therefore left to rely on multiple broker quotes to manually recreate a view of the forward market. This means traders need to be actively trading a market to get a decent view of where “value” is within it, and they have to trust that those broker quotes represent large enough of a sample to be truly representative.

Translating these quotes into a market view is still a labour-intensive process which becomes especially strained in volatile markets, no matter which way you cut the current methods.

This challenge has been one of the key drivers that has informed our product development. We see it as a key problem for traders and trading firms in OTC energy markets, and believe it will continue to constrain traders until it is finally solved.

By providing a view of forward curves in the OTC energy space we enable companies to capture more trading opportunities and arm them with strategic insights, whilst preserving their efforts for higher-value activities.


McKinsey believes digitisation can provide a competitive edge in metals, but we think the impact will be even bigger for OTC energy

Stanislav avatar
Shared by Stanislav • January 27, 2023

McKinsey believes digitisation can provide a competitive edge in metals, but we think the impact will be even bigger for OTC energy.

In a recent article McKinsey outlined how the digitisation of operating models provides a huge opportunity for early adopters in metals trading to differentiate themselves and establish a competitive edge, and how laggards may fall victim to progress.

We agree with both their diagnosis of the problem and the solutions, but think the opportunity is even bigger for OTC energy markets.

Traders in both energy and metals rely on relationships and broker networks, but use manual and non-standard processes to make decisions and manage trade flow, communicating via analogue channels like messenger chat and voice box.

The time spent managing these data flows ultimately decreases time spent on more strategic endeavours, and becomes harder to manage the more pressure is placed on traders to respond quickly to changing market dynamics.

“Digitisation provides opportunity for traders to [...] focus on building strong relationships and identifying new opportunities.”

McKinsey then goes on to outline the quickest wins and key areas where operating models need to be updated.

  1. Consolidate fragmented data for collaboration: Consolidate and aggregate data from fragmented sources such as phone, email etc. to get everyone working from one source of truth, facilitating collaboration.
  2. Automating price calculation: Reduce time spent manually managing models in Excel by standardising price and value calculations.
  3. Digitise reporting: Digitisatising reporting and approvals with counterparties, ideally through 3rd-party document digitisation.
  4. Systems integration: Integrating across platforms reduces manual manual work and costs, as well as facilitating collaboration by providing a single source of truth.

“Digitisation provides further opportunity to enhance competitiveness and grow revenues and profits by improving trade operations support.”

Upgrading these four areas not only provides a competitive edge through enhancing speed and quality of decision-making as well as profitability, it also decreases operating costs by between 19% - 28% (McKinsey).

As traders in energy markets face increasing pressures and volatility, the opportunity is a no-brainer, the only barrier is changing mindsets. Both the Tallarium and McKinsey take is that those who fail to adapt will be outcompeted by those who do.


Traders Are Making Profits, But The Energy Markets are Broken

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Shared by Stanislav • November 14, 2022

At the moment traders in energy markets are making multi-billion profits on the back of volatility and price inflation. But rather than waiting for hard times to strike, is now the best time to safeguard future profits and competitiveness?

Good times for energy traders?

For traders in the energy markets right now, the global political and economic climates mean there is plenty of volatility. This creates a fruitful trading environment with multiple opportunities to take advantage of as markets get displaced from their previous equilibrium levels. At the same time, there is the challenge of low and inconsistent liquidity as its provision in such a climate is much harder.

But ultimately this results in extremely hectic but profitable times for the best-positioned market operators. Whilst commodities prices start to decline from their peaks during the post-pandemic demand and war in Ukraine, energy prices remain buoyant.

Recent gains in the energy markets have driven successes for traders in the sector so far, but this performance may be masking an underlying problem which will become important when markets eventually settle down to a more familiar pattern.

Fundamentally, the energy markets are broken

Off-exchange energy contracts represent up to 96% of the total energy trading contract universe which includes contracts like LNG, biofuels, jet fuel, propane, petrochemical, environmentals, US pipeline crude and many more. But at the same time, there is no single public price for those contracts. Over $5tn worth of deals per annum is done using chats and phone calls and traders track prices manually using spreadsheets. Inevitably, when trying to compete in the market, energy traders have to act on ‘gut feel’ to make trading decisions as they rely on pricing from their private broker networks and legacy systems like Excel. This makes price discovery for energy products a cumbersome and convoluted affair and therefore a major challenge that adds risk and uncertainty to any trader’s day.

What’s more, this leads to major systematic challenges with trading decisions, clearing and timely risk management. At a time when many other asset classes have made significant strides in electronification, automation and transparency, something as fundamental as product pricing data is not standardised in energy markets. Those 96% of energy market contracts share no common data or common marketplace. Instead, pricing is inferred from a vast amount of voice and message chats between brokers and traders. Pricing information is manually input into Excel spreadsheets and analysed there. A typical energy trader will get as many as 5,000 quotes a day from as many as 50 different brokers, generating a large volume of unwieldy data that is impossible to handle, prone to errors and missed execution opportunities. As a result, energy markets heavily rely on dealing through brokers using legacy channels, with only a small fraction of the total volume transacted via electronic markets.

This anachronistic approach to energy trading, whilst currently dominating the trading landscape, is also its main barrier to long term confidence and security.

Today’s energy traders operate ‘blind’

Gathering, storing and using data in this way leads to information being siloed and stagnant in even the most established, most advanced energy trading teams. With no exchange pricing information to benchmark against and a finite network of contacts providing limited consensus, each trader operates ‘blind’ and has no real way of knowing with complete confidence if they are making the best deal possible, at the right time.

They cannot be sure they are not leaving value ‘on the table’ during transactions as there is no definitive, reliable confirmation available and this lack of pricing certainty inhibits deal flow, understandably giving traders cause for pause as they second-guess the potential outcomes. In this way, opportunities can be missed.

Moreover, the energy trading market can be a tough business anyway. Competition continues to intensify between energy trading organisations, whilst sustained volatility compels markets to adjust to macroeconomic factors much more quickly. This means that despite the importance of what energy traders do and the rising pressure they are under to make more good trade decisions than bad ones, traders have less and less time to interpret the market and make those trade decisions.

What they need at the very least is a real-time single source of truth that aggregates and structures those vast amounts of market data points into reliable pricing information.

The lack of innovation holds energy trading back

Because energy trading markets lag behind other asset classes when it comes to electronification, they have not yet felt the benefits of improved efficiencies, increased speed, higher access to liquidity and more certainty in trading decisions. Soaring energy prices have insulated the market from these realities of late and perhaps whilst profits are good, nobody is asking the question: “How do we remain in front of the curve when the energy markets normalise?” If nobody realises that the market is ‘broken’ nobody will ‘fix’ it.

There are wider implications too, as the impacts of these markets are not just on the profitability of traders, but on inflation for the general public and even the energy security of nations.

Time to embrace modernisation, better price discovery and execution

The good news is, as other markets such as equities have shown, there is life beyond Excel. If the energy trading and wider commodities trading markets can use this period of rising profits to invest in modernising their trading operations, the benefits to businesses over the medium to longer term could be profound. Imagine energy trading with the kind of clarity and confidence a digital trading infrastructure could bring. Imagine being able to act more quickly, access more liquidity, instantly know portfolio performance and fully understand its potential risks across the wider business and its implications, rather than just having isolated areas of positive performance within an energy trading floor. In other words, imagine trading energy the way people trade equity or FX but at the same time maintaining the benefits of the current broker-driven market structure.

These kinds of improvements could make energy trading more profitable overall, reduce risks and at the same time help maintain an orderly market in global energy supplies, helping to keep future inflation under control and pave the way for greater energy security for entire nations.

In today’s technology and innovation-rich financial markets, the solutions are being developed right now, and as equities proved, no transition to digitisation is impossible, no matter how embedded in tradition they are.

Now is the time to say goodbye to Excel constraints and the ‘old school’, legacy ways of energy trading and embrace automation within the trading lifecycle. This will lead to more informed trading decisions, accurate price discovery and better execution outcomes - and let’s not forget the wider benefits of increased market efficiencies and ultimately, wider uptake of the new markets which are critical for the energy transition.

Stanislav Ermilov is the founder and CEO of Tallarium, the provider of the energy market’s first and only definitive pricing data and analytics.