Global Energy Trading Market (2024 – 2030 )

In 2023, the Global Energy Trading Market was valued at USD 1.36 billion and is projected to reach a market size of USD 3.62 billion by 2030. Over the forecast period of 2024-2030, the market is projected to grow at a CAGR of 15%.

Industry Overview

The first oil futures contract on the New York Mercantile Exchange marked the beginning of energy trading in 1978. (NYMEX). The International Petroleum Exchange (IPE) and NYMEX successfully introduced futures contracts for oil and gas during the 1980s and 1990s. These prosperous futures exchanges proved their strong financial performance by surviving the recent energy trading scandals involving Enron et al. Presently, the established government-regulated futures exchanges as well as the off-exchange energy derivatives markets, which can clear on the futures exchanges, are market-made by oil companies and financial institutions to provide the necessary trading liquidity.

Asset trading firms engage in energy trading to maximize the profits from energy production. These firms employ production, demand, and price predictions. Energy traders study pricing and demand trends in addition to production estimates to decide on the best strategy for bidding in the energy market (for solar and other sources). Energy dealers also accept liability for energy produced and bear all risks related to trading an item on the market. Revenue losses due to under- and overcommitting to the planned production are among the risks.

These businesses have the risk-management expertise that will be increasingly used in developing international environmental markets. They also understand how to control their financial energy risks. As a result of trading disasters that have taught the energy markets that financial performance is fundamentally important, financial risk will be handled on recognized energy futures exchanges. The environmental financial markets are missing in market-making even though OTC brokers (such as Natsource, Evolution Markets, and CO2e) provide bilateral exchanges. However, principals are required to create a market.

Impact of Covid-19 on the industry

The global economy and supply chain have both been severely affected by the COVID-19 pandemic outbreak, which has also caused a major shift in the energy markets. The virus outbreak, which peaked in the USA by mid-April 2020, is still not known for how long it will last. Only an instantaneous cure, a vaccine, or a rise in herd immunity can bring about economic normalcy. Analysts and decision-makers predict that GDP may decline sharply in 2020 before rising in early 2021. TOVID-19's ability to persist, as well as the additional lockdown, unlock, social estrangement, and new workplace rules, affect both the demand for and supply of energy. Additionally, pandemic-induced unemployment is at its highest point of roughly 10%, and it may also range from between 15 and 30.

There have been significant variations in the price of crude oil globally; it fell by 50–80% in the first quarter of 2020 Footnote2, and a 10% drop in oil prices has led to around a 0.2% annual decline in US GDP (Balke and Brown 2018). WTI and Brent in near-term curves have declined on average 20% for the first time in the history of oil futures, and oil and gas corporations now face a greater risk of insolvency. Determining the performance of the energy markets during COVID-19 in terms of energy stocks, energy futures, energy EFTs, and an energy market sentiment index is our goal in this paper (VIX). The goal of the project is to show how the energy market reacts to the current pandemic outbreak and analyse the effects of federal assistance.

Market Drivers

The rising volume in the market will drive the market growth

The growth of vendor partnerships and the amount of power exchange trades are two major variables influencing the expansion of the global electricity trading sector. For instance, IEX and JEPX signed an MoU in April 2018 to jointly investigate the potential for cooperation in the electricity market. The MoU's scope includes chances for training to support power trading through platforms with a competitive market by setting up knowledge-sharing initiatives. To increase their transaction volume, several power exchanges and energy market operators, including HROTE, EPEX SPOT, and European Energy Exchange (EEX), are members of Europex.

The rising need for efficiency in the energy market will drive the market growth

Energy sectors use ETRM systems to assist with a variety of goals, such as regulatory compliance, a decrease in risk coverage, and acceleration of trading activities. Enterprise resource planning (ERP) services for process-oriented businesses or trading and collateral management platforms for sizable sell-side firms are driving the growth in demand for ETRM solutions. The absence of regulatory compliance deters new competitors. The capacity of ETRM to efficiently record trade and equity data as opposed to manual recording, which is prone to errors, is one of its extra benefits. With a wide range of applications in crude oil, natural gas, electricity, refined petrochemical products, and NGLs, the worldwide energy trading, transaction, and risk management (ETRM) market offer appealing potential for the industry's growth. The global energy trading, transaction, and risk management (ETRM) business are greatly needed given the challenging industrial and regulatory environments.

Market Restraints

Rising volatility in the market will challenge the market growth

Certain events in the recent past such as the outbreak of Covid-19 and the Russia-Ukraine war have resulted in a rise in trading volume abnormally. This led is rising volatility in the market thus making it difficult to analyse the market and trade.

ENERGY TRADING MARKET REPORT COVERAGE:

Segmentation Analysis

This research report on the global energy trading market has been segmented and sub-segmented based on, type, application and Geography & region.

Global Energy Trading Market- By Type

• Software
• Services
• Others

The market is divided into three segments based on type: software, services, and others. According to estimates, the service category by type will largely dominate the market in terms of volume. It is specialized trading and risk management software for companies involved in the trade of commodities.

Global Energy Trading Market- By Application

• Power
• Natural Gas
• Oil & Products
• Others

The market is divided into Power, Natural Gas, Oil and Products, and Others based on application.

The market is anticipated to be largely driven by the power application sector, which will also lead the market in terms of volume. The Energy Trading and Risk Management (ETRM) network of applications, tools, and systems facilitate the trading of energy commodities, such as crude oil, minerals, natural gas, electricity, etc. It includes software and tools made specifically to solve processes and potential problems. In several sectors, such as data gathering, resource optimization, and on-time energy supply, ETRM is quite active.

Global Energy Trading Market- By Geography & Region

• North America
• Europe
• Asia-Pacific
• Latin America
• The Middle East and Africa

A relatively young market for energy trading in the Asia Pacific. Therefore, throughout the projected period, the region is anticipated to show a need for ETRM solutions. The ETRM markets in North America and Europe are anticipated to grow even further, driven by large investments from trading organizations operating in these countries. The rise of the ETRM industry in these areas is also being fuelled by the U.S. shale gas boom and the turbulence of the energy markets.

Global Energy Trading Market- By Companies

1. Axpo Holding AG
2. BP Plc
3. Deutsche Borse AG
4. Energy Trading Co. Sro
5. Equinor ASA
6. Euronext N.V.
7. Fortum Oyj
8. Indian Energy Exchange Ltd.
9. Intercontinental Exchange Inc.
10. Japan Electric Power Exchange
11. JSW STEEL Ltd.
12. Manikaran Power Ltd.
13. Next Kraftwerke GmbH
14. NTPC Ltd.
15. Power Exchange India Ltd.
16. PTC India Ltd.

NOTABLE HAPPENINGS IN THE GLOBAL ENERGY TRADING MARKET IN THE RECENT PAST:

• Merger & Acquisition: - In 2022, Glencore's prior ownership of Inatech, a fast-expanding provider of energy trading and risk management solutions, has been bought by a Canadian business that specialises in the acquisition and expansion of vertical market software firms.
• Business Partnership: - In 2021, Eka Software Solutions, the top cloud platform for digital innovation, announced a partnership with Enverus, the top global energy data analytics and SaaS technology company, to provide energy traders with new choices for better risk management and decision-making.