Integrated Forecasting for the Petroleum Product Market
Integrated forecasting may be thought of as the simultaneous predicting of demand, supply and product prices in an environment, in which these same indicators are interrelated due to the mechanism of the market (supply and demand affect prices, whilst prices affect supply and demand).
The need for integrated forecasting arises when it is necessary to analyse the holistic response of the petroleum product market to significant changes in its structure (for example, following the construction of large production facilities or the development of transport systems) or in pertinent external conditions (for example, sharp falls or increases in the global market price for oil or tax reforms affecting the industry).
What are the Petromarket RG’s competencies in the integrated forecasting of the petroleum product market?
Petromarket RG already has a ready-made model for integrated forecasting of the petroleum product market, but one which only applies to Russia. Should the client request it, a similar modelling device can be created for any of the other post-Soviet countries.
What is special about Petromarket RG’s methodology?
- Integrated forecasting makes use of a unique computational model of the Russian bulk petroleum product market (the MRPPM or Model of the Russian Petroleum Product Market) developed by Petromarket RG.
- The MRPPM is an industry model that simulates the operation of a market mechanism and which – under a change in market conditions – forces demand, supply and petroleum product price to move in the direction of stable, but as yet unknown, equilibrium state.
- The MRPPM covers 21 petroleum product markets, including brand-name gasoline, diesel, jet fuel, other middle distillates, heating fuel oil, naphtha, VGO, tar, bitumen and coke.
- The MRPPM imitates the operation of 155 Russian petroleum processing companies (38 large-scale and medium-sized refineries and 117 mini-refineries).
- The MRPPM is able to differentiate between demand on the domestic petroleum product market, the supply of petroleum products to the domestic market and transportation costs for all 85 regions of the Russian Federation, in which bulk petroleum product prices differ.
- The MRPPM not only allows export volumes to be estimated, but also calculates the cost of transporting crude oil and petroleum products to all major centres of international trade.
- The MRPPM is capable “in a single scan” of forecasting 250,000 separate indicators characterising production, demand, the supply of petroleum products and the prices of these products in Russia.
- The forecasts include such indicators as the feedstock volumes processed at refineries, petroleum product production volumes, the volume of petroleum products supplied for export or for sale on the domestic market, the volume of petroleum products imported, the domestic demand for petroleum products, export netbacks and domestic market prices for crude oil and petroleum products, refinery margins, etc.
- The MRPPM allows forecasting of the development of the petroleum product market, dependent upon any given scenario.
- A forecasting scenario is a set of hypotheses relating to some future general economic situation (oil prices on the world market, dollar exchange rate, inflation, growth of the country’s economy, etc.) and the development scenarios for Russian oil production, Russian refineries, the petroleum and petroleum product transportation infrastructure and the various taxation regimes affecting oil production and oil refining.
- The choice of a scenario type and the number of scenarios selected are ultimately dependent upon the forecasting objectives.
- Integrated forecasting is carried out in incremental steps of one year.
- The forecasting period is limited only by the time interval over which the forecasting scenario extends.
What makes Petromarket RG forecasts stand out?
High degree of confidence
Calculations performed by the MRPPM on real data have confirmed the model’s ability to accurately forecast the operating mechanism of the petroleum product market.
In-depth and all-encompassing
Forecasting with the help of the MRPPM gives a complete picture of the market and leaves no questions unanswered as to any aspect of market operation.
The predicted characteristics of the petroleum product market are calculated within the framework of a single model and are therefore always fully consistent.
A real lack of alternatives
In the absence of any competitive forecasting tool, the MRPPM is regarded as the only reliable method of obtaining comprehensive forecasts of the petroleum product market.
The company is in a position to carry out integrated forecasting of the petroleum product market either on a one-off or regular basis by order of any interested party. Forecasting scenarios may be proposed by the client, or developed in-house by Petromarket RG, in accordance with the objectives pursued by the client.
How do I order integrated forecasting services?
Submit an application, indicating the following:
- your forecasting objectives;
- your forecasting horizon.
If you already have a draft proposal for your forecasting requirements, please attach this to your application.