Falling Oil Prices Drive Need for Better Data Management Practices

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The perilous freefall of oil prices during the last several months has been a stark reminder that uncertainty and volatility are relentless forces in the energy and commodities markets. During such times, information can be our closest ally. But to be valuable, that information must of course be timely, relevant, and accurate. As such, an effective data management system like ZEMA provides organizations with the reassurance that they will have the right information in the right hands at the right time, allowing them to operate with confidence during times of uncertainty.

With energy and commodities markets searching for equilibrium in light of recent events, there is a tendency for market information to have an exaggerated impact on pricing until more information arrives to calm the fluctuations. This uncertainty, and the ensuing variability in future price forecasting, can significantly impact the decision-making process in a negative way. This was confirmed recently by the EIA in the graph below, which demonstrates the effect of this uncertainty on the WTI price:

EIA WTI Crude Oil Prices
Source: EIA (http://www.eia.gov/todayinenergy/detail.cfm?id=19571)


“[M]arket expectations of uncertainty in the price outlook have increased as reflected in the current values of futures and options contracts. West Texas Intermediate (WTI) futures contracts for April 2015 delivery, traded during the five-day period ending January 8, averaged $51/bbl, with the value of options contracts establishing the lower and upper limits of the 95% confidence interval for the market’s expectations of monthly average WTI prices that month at $34/bbl and $76/bbl, respectively. The 95% confidence interval for market expectations widens considerably over time, with lower and upper limits of $28/bbl and $112/bbl for prices in December 2015.”

The urgency to put in place an effective data management system like ZEMA also comes from the fact that many organizations have built up their trade, risk, and back-office infrastructure in recent years and risk having them turn into expensive white elephants without a reliable feed of correct, accurate, and timely data. Many of them now realize that, regardless of the systems they have in place, real risk exposure comes from not having important information in the right hands quickly enough to adapt to an uncertain and rapidly evolving environment.

The World Energy Council recently described energy price volatility as “the new normal.” With ZEMA, organizations have the tools to not only help them cope with this volatility but to thrive in spite of it.

The ZEMA data management solution helps users:

  • Ensure that data is readily available, timely, and accurate.
  • Easily access data for extraction and analysis.
  • Rapidly deploy data to all users within an organization through web-based technologies.
  • Make information fully available for integration with downstream systems.
  • Save resources and build efficiencies.
  • Assist profitability and enhance their company’s bottom line.

Organizations succeed by having the right information in the right hands at the right time. ZEMA can provide an organization with this advantage. To learn more, visit ze.com/the-zema-solutions.

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