After a two week break Time for ChAI is back with a special miniseries: Talking Commodities.
Throughout this miniseries Stephen Butler (Chief Commercial Officer, ChAI) will be joined by Tom Brady, Executive Director of the JP Morgan Center for Commodities at University of Colorado Business School. This is the kick-off episode where Stephen and Jake talk to Tom about global commodities markets, the work the JPMCC is doing and look forward to the upcoming series.
-- Introduction (0:07) --
-- Global Situation Right Now and Market Recovery (1:17) --
-- Focusing on the Energy Sector Specifically (5:51) --
-- Actionable Insight: Mitigating Commodity Risk right Now (12:14) --
-- ChAI's approach to forecasting (14:36) --
-- The Work of the JP Morgan Center for Commodities (17:59) --
-- On the Miniseries: Talking Commodities (27:05) --
--Closing Thoughts (30:22) --
**Highlights**
tom on the market recovery:
...I just think we're in for more of a gradual slow climb out of this, you know, if you think you know it and just to get back to that kind of economic activity prior to the, to the pandemic, you know, it's, it's in my view, you know, you're gonna have to have some kind of vaccine. Yeah, it's not only developing the vaccine and making sure it works, but how do you get that distributed to 7 billion people on the planet? You know, it's just that, that kind of that's just gonna take time. You know, I saw recently an interesting chart on the count of, you know, security screenings for airport passengers here in the US yesterday, and, you know, that in in early March, that was about 2.2 million people a day getting screened, that sank to about, you know, a little over 85,000 in mid April, and, you know, currently we're right around 250,000. So, there's a long by that indicator, there's just a long way to go...
Tom on the energy sector and Oil:
...global demand back in 2019. Seems like a long time ago, but you know, it was around 100 million barrels a day demand. I've seen forecasts, which I kind of agree with that. That'll Probably grown to about 108 million barrels by that mid 20s, mid 30s, mid mid 2035. You know, more people drive more cars, you know, increased urbanisation all the activities that you know, is that, you know, some of these emerging economies become more and more developed, you know, that then it'll start to decline, you know, through through 2015 mostly driven by, you know, increased use of electric vehicles as they become more widespread, but still by 2050 we're going to be around 100 million barrels of oil demand today so right, pretty much where we are now...we have to add some realism to that discussion...
Stephen on ChAI's approach to forecasting:
We try and take Emotional elements out of predicting prices... Having been a trader for 25 years, I understand when the information in front of you tells you one thing, but your gut feeling sometimes, you may go against that now, there are going to be times when we aren't going to be able to, or, you know, on large events that we've never seen, like, like we currently are going through there may be times when people have to actually take a step back and go look, this is a real game changer. Let's just sit down and analyse well, over a medium to long term, you know, the philosophy of using automated machine learning algorithms. It does work, it does work if you just let the machines do their thing and don't try and tweet them too much. They do work. And that leads me to my second point is As Tom rightly points out, it's all about trying to look at the sort of data that is out there...
