Why Downstream Energy Needs Operational Decisioning

The one thing you can count on within the downstream oil and gas industry is volatility.

In the past year, geopolitical conflicts, supply disruptions, and administrative mandates to secure supply while transitioning to cleaner energy have clashed with softer-than-expected demand resulting in margin compression.

To reduce risk and improve margins, downstream companies are in a constant race to quickly access the latest market data and insights and then confidently act upon new opportunities. This competitive edge is operational decisioning.

Operational decisioning is a new model for margin, growth and risk performance. It is based on five core requirements for the modern decision cycle.

Verticalization: a fit-for-purpose platform built for the sector with embedded industry logic.

Data superiority: decision-grade data with granular, real-time input that are continuously updated, governed, and AI-ready.

AI-Driven Insight: AI that can learn from historical signals and current context to forecast what is likely to happen and recommend action.

Decision Velocity: Closed-loop decisioning processes where teams see, decide and act in real-time.

Trust and Neutrality: Neutral, transparent intermediaries to govern shared data use, enforce compliance, and protect business integrity.

 

Faster insights on volatile market data

Good decisions require good data. In rapidly evolving conditions, good decisions require decision-grade data for more confident decisions.

Traditionally, the industry weighs year-over-year and past performance data as benchmarks for predicting demand, while relying on the weekly U.S. EIA refined fuels report on national demand and production levels (and bi-monthly for state-level sales data).

Stop and think about that further: The industry makes narrow margin decisions for large volume trades based on week-old data and unrelated past performances—while daily demand figures may fluctuate by as much as 10k gallons due to unpredicted influences.

The same challenges exist for fuel buyers. Prices often change multiple times a day due to supply variances, changes to supplier policies, or even the operating status of terminals. Fuel buyers and sellers who rely on outdated information are often caught off-guard. Meanwhile, those with access to real-time insights are better able to adjust their strategies.

 

Improves situational awareness with contextualized data

Data without context may be informative but not necessarily powerful. As example, suppliers know their internal inventory management — but what if that information was benchmarked and updated in real-time against total market supply, logistics status, and weather conditions?

The increased value from operational decisioning stems from operational systems with embedded industry logic, so insights translate directly into actions that matter.

Another example has an energy supplier aggressively reducing prices to shed excess inventory, yielding a 4% increase in volumes over four days. However, contextual insights may indicate that total market volume increased by 6.4% over the same period, indicating that demand was greater than expected.

In this case the supplier could have reduced their financial risk, possibly maintaining original margins. With intraday visibility into actual demand, the market becomes less hazy. Instead of educated guesses, suppliers can make informed, confident decisions.

Using a technology platform like DTN Fuel Operations Hub, purpose-built for today’s operational challenges delivers contextual, industry insights, by integrating demad data with other information, such as near real-time view of market conditions and transactions, real-time weather analytics, supply inventory, and trading positions.

Daily market-level demand figures offer insights to many players in the downstream market with the right context. Wholesalers can enhance decisions when timing product availability for export or moving in/out of storage. Operations managers can use the same information to better manage the timing and placement of products during seasonal spec changes. Some energy companies have reported that real-time rack-rate data provides better insights into competitor positions.

Using a technology platform like DTN Fuel Operations Hub, purpose-built for today’s operational challenges delivers contextual, industry insights, by integrating demand data with other information, such as near real-time view of market conditions and transactions, real-time weather analytics, supply inventory, and trading positions. The right information at the right time lets companies uncover and capitalize on opportunities — not just by the day, but often by the hour.

 

Optimizes action for decision velocity

Downstream oil and gas buyers constantly look to expand their supply options. In much the same way, sellers seek optimal moments to make a move. Each side of every transaction simultaneously considers numerous factors related to supply, location, price, and product quality.

Using integrated decision-grade data feeds that can automate on pricing parameters for specific customers increases transactional velocity and reduces risk from sudden market shifts caused by factors beyond the buyer or seller’s control; e.g., a refinery shut-in or pipeline cybersecurity threat.

 

Enables advanced digitalization

While digital modernization is a top goal for the downstream oil and gas industry — rivaling revenue growth according to this Forrester study — only 43% report investing in digital infrastructure. Many companies cite not having the right tools or skills in place to implement digital modernization.

Operational decisioning offers multiple advantages for downstream companies, including better data and contextual analytics, broader market insights, and faster problem-solving.

Operational decisioning supports digitalization with solutions that deliver advanced insights without requiring large data science teams. This is due to the heavy technical lifting needed to generate real-time insights, e.g. constantly collecting, synthesizing, and modeling numerous complex data sets is now offered through cloud-based enterprise solutions.

These robust processes are delivered through interface programs that easily integrate with a company’s existing system or are delivered through a software platform. This means that an energy company doesn’t have to design, build, and maintain its own data operation hub to advance its digitalization journey.

For those that have already leveraged operational Decisioning, they report improved analytics of market dynamics, useful insights for identifying emerging supply trends, and improved operational efficiencies.

Learn more about operational decisioning delivered through the DTN Fuel Operations Hub.