What is ETRM? How does it Benefit Oil and Gas Trading Companies?

What is ETRM? How does it Benefit Oil and Gas Trading Companies?

Energy CIO Insights | Tuesday, December 03, 2019

Oil and gas trading companies are always on the lookout to improve process performance and ETRM software offers a bouquet of services for companies to enhance operational efficiencies.

Fremont, CA: Energy Trading and Risk Management (ETRM) software is used by banks, financial trading companies from upstream, midstream to downstream as the software focuses on energy commodity trading and risk management. The core functionality of the software includes trade capture, counterparty creditworthiness, trade validations, risk factors reporting and monitoring, limit monitoring, financial derivative accounting and hedge accounting, and trade compliance. Oil and gas companies use ETRM software for product scheduling on pipelines, vessels, rails, and storage tanks together with trade volume accounting and actualization settlement.

A handful of ETRM software use artificial intelligence to maximize margins and are designed specifically for the oil and gas industry to streamline trading operations and better risk management

Top ETRM Companies

Additionally, ETRM solution providers also develop a blockchain to enable traders to automate their trader orders, reduce manual paperwork, and get better spreads. ETRM solutions offer full trade management from amended trade, new trade, contracts document generation and approval workflow, electronic confirmations, scheduling, credit monitoring, economics modeling and analytics, actualization and accounting settlement, price analytics, sub-ledgers, and optional financial accounting. Furthermore, oil and gas trading companies can create a blockchain network using the blockchain technologies provided by the solution providers to conduct smart contracts with their traders, JVs, business partners, vendors, banks, and regulators.   

Oil and gas trading companies are looking for opportunities to improve process performance and achieve significant cost savings. Thus, in today’s market situation with squeezed margins, artificial intelligence enables companies to enhance operational efficiencies. AI is implemented in short sprints focusing on a specific problem, with manageable costs. When applied to commodity trading, AI-powered technologies do not possess the power to predict potential price movement or forecast a massive change in a specific commodity. Instead, AI attempts to read and decode order flow coming into the exchanges. The system calculates incoming data in milliseconds, analyzes it, and automatically produces buy and sell orders with high speed and in vast quantities.

In today’s low-price market, oil and gas companies need to be competitive and must adopt AI technologies. AI makes a profound impact on commodity trading by mining crucial data and providing cheap and readily available tools. The AI-based decisions are calculated, accurate, and unbiased, unlike those made by humans who are very emotional for the stock market.

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