Energy Trading and Marketing: The Macro View

Vincent Kaminski

In this chapter we shall elaborate further on the central message of this book, signalled in the Introduction: markets for different energy commodities represent an integrated, intertwined system, with connections between each component of that constantly changing system. The differences between physical and chemical properties of different commodities and differences in production and transportation technology do not change the basic fact that energies traded in the markets share many common features – and that these markets can be analysed using identical or similar tools. Interdependencies between different parts of the energy complex have profound implications for price formation and price dynamics. One cannot successfully trade one type of energy without paying attention to the developments related to other parts of the system. This translates, in turn, into the principles underlying the procedures of energy trading organisations, the design of trading floors, required skills and data flows.

We will start by discussing the common features of different energy markets. These commonalities explain why it is possible to uproot a natural gas trader and move them to an