Energy & Commodity Trading

Electricity and gas - as well as other energy commodities used in the generation of electricity - can be bought, sold and traded upon markets or exchanges via bids to buy, offers to sell, short-term trades and financial instruments such as futures, forward contracts and derivatives.

Each objective - immediate need, future price protection, risk mitigation - has associated energy trading strategies.

Typically energy trading consists of:

• SPOT TRADING - A transaction in which delivery either takes place immediately or with a minimum of time between the trade and delivery due to technical constraints.
• FORWARD CONTRACTS - A forward contract is an agreement between two parties to exchange a given quantity of a commodity at some fixed future date for a price defined today.
• FUTURES CONTRACTS - A futures contract is similar to a forward contract but is standardized in respect to the quality, quantity, delivery time and location for each commodity and is transacted through a futures exchange.
• HEDGING - A strategy for decreasing or transferring risk, which is typically executed via call or put options. More sophisticated techniques use other derivatives or combinations of derivatives.

An important component of energy trading strategy is risk management via rights, call and put options, which are designed to transfer financial risk between participants.

The Energy & Commodity Trading data model provides an integrated data architecture that supports the trading and analytic requirements of energy trading organizations.

The Energy & Commodity Trading model can be seamlessly integrated with ADRM's Oil Sands Mining, Upstream, Midstream, Petroleum Refining and/or Oil & Gas Downstream data models, with our Gas & Electric Utility industry data models, and with many of our financial industry models such as Commercial Banking and Corporate Investment Banking.