Why a Holistic Downstream Market View is Crucial to Success

Businessman on laptop with data

The economy is picking up, and fears of an immediate recession are starting to fade. With more offices moving back to in-person staffing — or at least a hybrid model — demand is beginning to recover, if the increased crude production numbers from the Energy Information Administration (EIA) are any indication.

To take advantage of this momentum, downstream players in the retail space have several things to consider. This blog outlines the three key types of data that help drive informed decisions for optimum market performance.

 

1. Timely demand data

EIA data is at least one week old, and a lot can happen in a week. Inventory and purchasing managers may or may not be communicating with each other. The weather can suddenly turn; what was once forecast as a run-of-the-mill thunderstorm can birth a mesocyclone within hours, becoming a supercell storm with severe wind, hail, or tornadoes. On the other hand, severe storm forecasts can be significantly off.

Instead of waiting for week-old data, you need a source that tells you what’s going on each day in the markets where you transact. Authoritative demand data from the source of over 80% of actual fuel transactions can give you crucial insight into how you should position yourself. Do you want to go short or long? Waiting a week to find out puts you in a tough spot if you bet wrong.

 

2. Contextual local market data

You know your product movement. Let’s consider a city where commuter traffic has increased. As a result, you’ve moved 15% more product. That’s a good result, of course. However, what if the overall market moved 25% more product? That would indicate you actually lost market share in that area; this is why context is everything.

Instead of guesswork regarding where you should put product, you can know for certain that — for example — premium octane fuel is seeing a sudden surge in a specific city. If you jump on that, you can adjust your inventory levels to take advantage of local conditions.

 

3. Global petroleum market data

The final piece of data to consider for success in the downstream industry is how the global energy market is moving. It’s critical to stay on top of geopolitical trends. From sanctions on Russian energy exports to OPEC+ production announcements, the refined fuels trading arena is in constant flux. Be sure to rely on an unbiased, experienced analysis team to help you decipher what the various indicators mean and what to expect.

Also, as mentioned above, look at production trends in the upstream. These are key leading indicators of demand. Lastly, severe weather can have impacts on the market in multiple forms. Hurricanes have occasionally forced refineries to shut down, and when gas prices subsequently soar, panic-buying can cause major spikes that reverberate throughout the supply chain.

 

A holistic picture

Combining these three types of data delivers a value far greater than the sum of the parts. When you have data that is immediately relevant and correct, placed in the context of the market from which that data flows, against the background of the world energy markets, the result is actionable operational intelligence that allows you to make confident decisions in the moment.

Combining these three types of data delivers a value far greater than the sum of the parts.

And that’s the key that unlocks greater potential: it’s not about looking at the previous day’s data in the morning to make decisions about the current day’s posture. Rather, it’s being nimble yet solid; able to change course as the market moves, knowing you’ll still get to the desired destination: profitable outcomes.

If you’re looking for better demand intelligence, DTN can help. Since we handle over 80% of downstream refined fuel, DTN is uniquely positioned to provide accurate, timely data regarding product movements far sooner than EIA data. Plus, with historical data going back more than five years, Refined Fuels Demand from DTN can give you insights that indicate trends you can prepare for.

In addition, DTN ProphetX® offers insights regarding the overall downstream landscape, with superior analysis by deeply experienced market experts.

Finally, more than 70% of U.S. utility companies and cooperatives trust our WeatherSentry® solution to provide accurate, timely forecasts and enhanced storm tracking, so they can position resources to resolve storm impacts faster. For downstream energy leaders, it can deliver detailed, location-specific warnings for severe weather that can interrupt supply at refineries or impact terminal operations.

Combining these three kinds of data provides a more accurate and detailed view of local markets and the broader petroleum industry, helping refined fuel professionals make more confident and profitable decisions.