London, September 2010

Impact on Commodity Market

AT is continuing its march through the asset classes with commodity markets increasingly in the frame. Whilst there is an established cadre of AT platforms being used in metals, freight and soft commodity markets, the energy sector has been slower to adopt this technology. AT has been successfully applied in more liquid energy markets such as crude and refined oil products, as well as natural gas in the US. However, broader application in many other energy commodities is still in its infancy.

This less trodden path is seen as an opportunity by many, with commodity algorithms becoming increasingly sophisticated. And with more institutional money flowing into commodities, managers are looking for new and innovative ways of seeking alpha. As such, AT is being applied to the most highly volatile and active commodity subsets, especially crude oil.

By Guy Isherwood

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