Data Sources and Data Reports: a Year in Review

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It is the first anniversary of DataWatch magazine published by ZE. Any anniversary is a good excuse to boast success and offer a sneak peek into future plans and aspirations.

It seemed logical  that we should follow the common path and  summarize everything what has happened to us over this year. Of course, everything has been very good. We have expanded our coverage, launched the website, started LinkedIn group and Twitter account. Now we are looking for other avenues to reach to our readers. Well,.. this is it for boasting and aspirations. As for the summary of data sources, data providers and market changes, here it is.
After following market and industry developments for a year, it has become apparent that there is actually a strong correlation between market, political and economic events and products released by private data providers and public data sources.

The last year has been a journey through twists and turns of events in the global and domestic arena. We suffered through a European crisis, watched new marketplaces emerge in Asia and Latin America, navigated the hurdles of having environmental regulations approved or dismissed, and witnessed a shift in focus to fossil fuels.

ICE and CME have remained the main players in the fossil fuel fields. New types of swaps, futures, and options have been added to the suite of derivatives built for these products. One reason for this heightened activity is a growing demand for fossil fuels in Asian and European markets. New derivatives and price assessments on gasoil, jet kerosene and other petroleum products were developed in response to market movements in Japan, China, India, Indonesia and Singapore. Asian and European thirst for natural gas is reflected in new LNG products (indexes, swaps) launched by CME, Tradition and ICIS. Argus and Platts kept adding new series of European and Asian LNG price assessments, and revised existing assessments by increasing the number of ports and increasing the cargo sizes that follows the global trend of growing volumes of LNG trades. Meanwhile, LNG is becoming a separate commodity.

Changing dynamics in the crude oil markets brought in another major increase in data sets. Two major crude oil benchmarks, WTI and Brent, underwent a change from their typical behavior. Brent prices started to climb and WTI moved in the opposite direction. There were several reasons explaining this trend. On one hand, the Middle East turmoil, European financial crisis and declining production in the North Sea; pushed Brent prices up. On the other hand, a quite unexpected rise of North American oil production supported by rising production of Alberta oil sands, along with increasing production in North Dakota, Saskatchewan, and Montana, kept sending more crude into the pipeline, suppressing WTI prices. The spread between the two markers continued to widen and the global spotlight was focused on European crude derivatives with more of them being cleared by major exchanges. WTI is not the world’s most important oil benchmark any more and until the historic balance again sees WTI leading the pack, Brent contracts will continue to attract marketplace interest, fueling high volumes of trades. Exchanges and private data providers introduced new Brent futures, swaps, options, spreads, new assessments and swaps contracts built on Brent assessment. A new kid on the block is Alberta oil; the growing share of Canadian grade prompted introduction of new derivatives and assessments by Argus and CME for Western Canadian crude whose importance is growing internationally.

Europe has drawn attention because of its local energy concerns but more so because of its extended financial and political turmoil. Meanwhile, data providers are turning lemons into lemonade by increasing their derivative offerings that are designed to hedge against exposure to European risks: NYSE, Eurex, Xetra are among those that introduced interest rate futures in European currencies and other products mitigating local risks.

As the old world is fighting the economic distress and pulling together resources, new players are enjoying current opportunities that are opening to them. We are observing the dawn of new marketplaces. Closure of the Canadian Wheat Board by the Canadian government and the ban of the Board’s monopoly of handling western trade led to the emergence of a new market with ICE immediately introducing derivatives for Western Canadian wheat and barley. Two of the world’s most tightly closed economies announced the creation of open markets: an electricity market will be established in Japan and energy trading will be launched in the Middle East. China announced its decision to introduce crude oil-based securities.

Asian market makers get connected with each other and expand beyond their borders.

To read the full editorial article, click here

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