Industries Agree Future of Energy Trading Is Online
Matthew F. Gallagher Dow Jones News Service, THE JOURNAL RECORD
NEW YORK -- Point, click and trade.
The three words that rocked the world promise to revolutionize oil markets, too.
Oil prices are already in turmoil.
But the classic supply-and-demand drama that's shaking oil may come to seem trivial compared with the Internet's impact over the next few years. The future of oil trading is online, oil companies and commodities exchanges agree. Now they've got to figure out how to put it there.
"E-commerce is spinning us in so many different ways. Companies are making a serious effort to understand it and build it into their business," said Art Nicolleti, president of Equiva Trading Co., the trading arm of a joint venture of Shell Oil, Texaco and Saudi Arabian Oil Co.
Several major energy companies are putting substantial capital into plans designed to move trading online.
Equiva Trading has invested more than $6 million in Houstonstreet.com, an energy trading site, to which the company hopes to move all of its 7 million barrels a day of oil trading.
Texaco has bought a minority stake in TradeCapture.com, and will use the e-commerce platform to trade refined products internationally.
After Houston energy brokerage International Energy Partners LLC clients asked for faster, cheaper and more reliable ways to make money trading petroleum, the company launched NRGLine.com in January, for refined product trading.
The race to trade barrels online also has attracted the New York Mercantile Exchange, the world's largest energy futures market. Nymex is considering offering a one-stop e-commerce site where traders can buy crude oil and products and offset the risk attached to those deals by trading futures.
"We're looking to wrap the floor in technology, to create a virtual e-commerce environment while still maintaining the advantages of an open outcry system," said Nymex spokeswoman Nachamah Jacobovitz. "You're placing the order over the Internet, but it ends up being executed in the trading ring. …