History
Danske Commodities was founded in September 2004 by Henrik Lind. [3] The company started off with trading electricity across the border between Germany and Denmark, with the first trade implemented on 1 November 2004.
Building its foundation on trading on the ‘Day Ahead’ power market, Danske Commodities expanded into the intraday power trading market in 2007.
In 2009, gas trading and wholesale services, such as energy procurement for supply companies and management of volume and balancing risks, were added to the company's business activities. In 2011 the company added renewable services optimising the variable output from wind and solar. Today, the company has around 4700 MW of renewables under management.
In 2018, Danske Commodities announced it had been acquired by Norwegian energy company Equinor, with the acquisition being completed on 1 February 2019. Danske Commodities is a wholly owned subsidiary to Equinor, operating under its own name and brand.
Currently, Danske Commodities is present in 42 power markets and in 23 gas markets with a 24/7 trading setup. The company employs approx. 600 employees and is domiciled in Aarhus, Denmark. Besides the headquarters in Denmark, Danske Commodities has offices across five continents.
A commodity market is a market that trades in the primary economic sector rather than manufactured products, such as cocoa, fruit and sugar. Hard commodities are mined, such as gold and oil. Futures contracts are the oldest way of investing in commodities. Commodity markets can include physical trading and derivatives trading using spot prices, forwards, futures, and options on futures. Farmers have used a simple form of derivative trading in the commodities market for centuries for price risk management.
An electricity market is a system that enables the exchange of electrical energy, through an electrical grid. Historically, electricity has been primarily sold by companies that operate electric generators, and purchased by consumers or electricity retailers.
A hedge is an investment position intended to offset potential losses or gains that may be incurred by a companion investment. A hedge can be constructed from many types of financial instruments, including stocks, exchange-traded funds, insurance, forward contracts, swaps, options, gambles, many types of over-the-counter and derivative products, and futures contracts.
In finance, a contract for difference (CFD) is a financial agreement between two parties, commonly referred to as the "buyer" and the "seller." The contract stipulates that the buyer will pay the seller the difference between the current value of an asset and its value at the time the contract was initiated. If the asset's price increases from the opening to the closing of the contract, the seller compensates the buyer for the increase, which constitutes the buyer's profit. Conversely, if the asset's price decreases, the buyer compensates the seller, resulting in a profit for the seller.
Crack spread is a term used on the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it. The spread approximates the profit margin that an oil refinery can expect to make by "cracking" the long-chain hydrocarbons of crude oil into useful shorter-chain petroleum products.
An energy derivative is a derivative contract based on an underlying energy asset, such as natural gas, crude oil, or electricity. Energy derivatives are exotic derivatives and include exchange-traded contracts such as futures and options, and over-the-counter derivatives such as forwards, swaps and options. Major players in the energy derivative markets include major trading houses, oil companies, utilities, and financial institutions.
European Energy Exchange (EEX) AG is a central European electric power and related commodities exchange located in Leipzig, Germany. It develops, operates and connects secure, liquid and transparent markets for energy and related products, including power derivative contracts, emission allowances, agricultural and freight products.
A virtual power plant (VPP) is a system that integrates multiple, possibly heterogeneous, power resources to provide grid power. A VPP typically sells its output to an electric utility. VPPs allow energy resources that are individually too small to be of interest to a utility to aggregate and market their power. As of 2024, VPPs operated in the United States, Europe, and Australia.
Natural gas prices, as with other commodity prices, are mainly driven by supply and demand fundamentals. However, natural gas prices may also be linked to the price of crude oil and petroleum products, especially in continental Europe. Natural gas prices in the US had historically followed oil prices, but in the recent years, it has decoupled from oil and is now trending somewhat with coal prices.
A commodity broker is a firm or an individual who executes orders to buy or sell commodity contracts on behalf of the clients and charges them a commission. A firm or individual who trades for his own account is called a trader. Commodity contracts include futures, options, and similar financial derivatives. Clients who trade commodity contracts are either hedgers using the derivatives markets to manage risk, or speculators who are willing to assume that risk from hedgers in hopes of a profit.
Amaranth Advisors LLC was an American multi-strategy hedge fund founded by Nicholas M. Maounis and headquartered in Greenwich, Connecticut. At its peak, the firm had up to $9.2 billion in assets under management before collapsing in September 2006, after losing in excess of $6 billion on natural gas futures. Amaranth Advisors collapse is one of the biggest hedge fund collapses in history and at the time (2006) largest known trading losses.
The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date. In a spot market, settlement normally happens in T+2 working days, i.e., delivery of cash and commodity must be done after two working days of the trade date. A spot market can be through an exchange or over-the-counter (OTC). Spot markets can operate wherever the infrastructure exists to conduct the transaction.
Intercontinental Exchange, Inc. (ICE) is an American multinational financial services company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the Fortune 500, S&P 500, and Russell 1000, the company owns exchanges for financial and commodity markets, and operates 12 regulated exchanges and marketplaces. This includes ICE futures exchanges in the United States, Canada, and Europe; the Liffe futures exchanges in Europe; the New York Stock Exchange; equity options exchanges; and OTC energy, credit, and equity markets.
Lean Hog is a type of hog (pork) futures contract that can be used to hedge and to speculate on pork prices in the US.
Weather risk management is a type of risk management done by organizations to address potential financial losses caused by unusual weather.
Nord Pool AS is a pan-European power exchange. Nord Pool has its main office in Oslo and further offices in Stockholm, Helsinki, Tallinn and London. The company is owned by the European exchange operator Euronext as well as TSO Holding, which represents the continental Nordic and Baltic countries' transmission system operators. Nord Pool has two subsidiaries, Nord Pool AB and Nord Pool Finland Oy.
Tenaska is a private, independent energy company based in the United States. The employee-owned company was founded in 1987 and is headquartered in Omaha, Nebraska, with regional offices in Dallas, Denver, Philadelphia, Boston, Houston, and Calgary and Vancouver in Canada. The company employs approximately 800 people.
European Power ExchangeSE is a European electric power exchange operating in Austria, Belgium, Denmark, Finland, France, Germany, Great Britain, Luxembourg, the Netherlands, Norway, Poland, Sweden and Switzerland.
Flett Exchange is an environmental commodity exchange and brokerage firm based in Hoboken, New Jersey. The company is specialized in trading of Solar Renewable Energy Certificates (SRECs) in the United States.
The Saint-Petersburg International Mercantile Exchange (SPIMEX) is a Russian commodity exchange incorporated in 2008. It has offices in Moscow, Saint Petersburg and Irkutsk.
