How do you monitor oil markets from space?

Earth observation (EO) data has a wide variety of applications. One application regards understanding the flow of physical commodities. EO data can provide insight into these flows, which translates into commercial advantages for market actors. To learn more about the potential of EO data to help understand oil markets, we spoke to Florian Thaler, CEO and Co-Founder of OilX. He explains the company’s services and EO’s commercial potential.

What services does OilX provide customers?

Established in 2018, OilX combines advanced data science and satellite technology with extensive oil analytics knowledge to create the world’s first digital oil analytics platform. Headquartered in London, OilX was created out of pure necessity. I spent some 15 years in commodities trading at oil major Shell, then in investment banking at Citi, and finally in the New York hedge fund Och-Ziff. I had an eye-opening moment while working for Och-Ziff. Hedge funds have the most advanced tools but not necessarily easy access to fundamental market data. The physical players have the access to the fundamental data, but they – on the flip side – often lack the tools to process the data efficiently. So OilX was born out of necessity to take the tools of a hedge fund and apply these to the fundamental insights of a physical commodities player. Our mission is to provide access to fundamental oil data to every financial player.

To what extent does OilX rely on satellite-collected data to provide its services?

At OilX we believe in the power of truly integrated analytics. We leverage satellite technology, artificial intelligence, and deep oil sector domain expertise to generate a real-time view of oil markets (see a video here). For many years, the edge in oil trading was “boots on the ground,” which meant that your information edge came from owning physical assets like oil refineries and oil fields around the world. Satellite data and artificial intelligence allow a new paradigm that we call “eyes in the sky.” In other words, you don’t necessarily need to be in Libya anymore in order to find out what is going on on the ground with reasonable accuracy. One of our clients likened OilX to playing chess from space.

Nikos Argyropoulos, OilX’s EO Data Scientist, describes the challenge at OilX as follows: “It is very often the case with companies in the EO sector that they cannot build their customers’ confidence in their products or services due to them being very niche. The way to build confidence in EO products and services is by showing the customers that the data services have been validated. In OilX, we can achieve this due to our collectively significant knowledge of the oil market and because of our access to difficult-to-acquire ground truth data. That puts us in a position where we are both able to solve problems using cutting-edge techniques and also prove that our data can be trusted.”

For what other business areas do you think satellite-collected data has particular relevance?

We think Earth observation, or as we prefer to call it “Earth intelligence” (EI), has a bright future in monitoring supply chains such as those for commodities. EI can play a key role in allowing users to remotely monitor and thus create a “digital twin” of supply chains. OilX works predominantly in the oil space but via its sister company, DBX Commodities, it also sees the massive insight edge that EI can bring in global coal and iron ore markets. In short, we believe in a strong role for satellite-collected data in understanding commodities that have long supply chains. The possible applications are endless: from commodity trading and market insights to asset monitoring and insurance monitoring of supply chains.