Analysts in the global oil market space have long relied on traditional lighthouses of data like inventory reports, production statistics, and economic indicators. But a new tide is rising, bringing with it a flood of alternative data sources fundamentally reshaping how experts sail along these turbulent waters.
This alternative data revolution is a tsunami of information derived from satellites orbiting the Earth, mobile phones tracking human movement, and algorithms scraping the internet. It offers unprecedented visibility into the complex interplay of factors influencing oil prices and market dynamics.
At the crest of this transformative wave is Kurush Mistry, an oil analyst with over a decade of experience. Mistry’s journey from traditional analysis to embracing cutting-edge data sources mirrors the industry’s evolution and he’s happy to share his insights, providing a unique window into how alternative data is supplementing — and often supplanting — conventional wisdom in oil market analysis.
“There’s been a lot more alternative data, partly because of the availability of new technology — satellites, big data, and the ability of companies or providers to process it,” Mistry explains. This shift represents a significant departure from traditional analysis methods, offering a more granular and real-time view of market dynamics.
High Stakes in the Oil Sector
The stakes in the oil market couldn’t be higher. Oil remains the lifeblood of the global economy, its price fluctuations rippling through every sector from transportation to manufacturing. As geopolitical tensions, technological disruptions, and environmental concerns collide, the ability to accurately forecast oil market trends has never been more crucial — or more challenging.
The tools and techniques that analysts like Kurush Mistry are using to extract signals from noise are reshaping the very nature of decision-making in one of the world’s most critical markets.
The questions loom large: How will this flood of data change the industry’s decision-making processes? What new skills and technologies will analysts need to stay afloat? And ultimately, how will this rising tide of alternative data reshape our understanding of one of the world’s most influential commodities?
Kurush Mistry on Alternative Data Sources in Oil Analysis
Mistry highlights several crucial alternative data sources that have become indispensable in modern oil analysis. “Looking at, for example, the mobility data that Google used to publish. Unfortunately they don’t anymore, but some other providers are attempting to offer similar data. Or looking at monitoring more closely inventory levels that were generated by satellite imagery,” he notes. These sources provide insights that were previously unavailable or difficult to obtain through traditional means.
While alternative data offers new opportunities, it also presents challenges. Kurush Mistry emphasizes the need for careful interpretation and integration. “You have to dig deeper and try and find more creative or interesting things to explore and to possibly identify profitable trading opportunities,” he says, highlighting the analytical skill required to leverage these new data sources effectively.
The COVID-19 pandemic was a catalyst for the adoption of alternative data in oil market analysis. Mistry recalls, “Even things like flight schedules — typically we would’ve looked at jet fuel demand as sort of, all right, moving along, up, down a little bit based on economic growth, travel trends, et cetera. But then it’s gone down to such low levels, how do we figure out if and when it’s coming back?” This unprecedented situation required analysts to seek out new data sources to understand rapidly changing market conditions.
Mistry stresses the importance of an international perspective in utilizing alternative data. “You have to have a much more global view. Your models have to be global, but to get the best information, hopefully you have colleagues or contacts in different locations around the world, and you can ask them questions about things that are not clear or get some interesting tidbits of information that you can incorporate into your models to make them more accurate and also more integrated.”
Oil Market Analysis — What’s Next?
Looking ahead, Kurush Mistry sees the integration of renewable fuels as a crucial development in oil market analysis. He says, “In 2022, understanding the growing significance of renewable fuels in the energy equation, I broadened my expertise to include sustainable aviation fuel, renewable diesel, ethanol, biodiesel, and U.S. soybean oil.” This expansion reflects the evolving nature of energy markets and the need for analysts to adapt skills and knowledge accordingly.
The rise of alternative data has also impacted the relationship between analysts and traders. Mistry describes the ideal scenario as “where you’re working as a team. There is a constant iterative process whereby analysis is presented to the traders. There’s feedback, they speak to someone, and they say, ‘No, actually this assumption of yours may not be valid because I’ve spoken to someone at a refiner and they think what you’re saying is wrong.’”
The rising tide of alternative data in oil market analysis represents a fundamental shift in how industry experts like Kurush Mistry approach their work. As these new data sources develop, it will be crucial for analysts seeking to decode market signals and provide valuable insights in an increasingly complex industry.
Mistry’s experience and adaptability in embracing alternative data sources exemplify the changing nature of oil market analysis. In an industry where change is the only constant, the rising tide of alternative data is reshaping the very foundations of oil market analysis, promising new insights and challenges for years to come.
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