Aggregation

Aggregation refers to the process of consolidating positions, volumes, exposures, or data across multiple contracts, delivery points, or book structures in order to obtain a single combined measure that reflects overall risk or commercial holdings. In energy trading, Aggregation is essential because participants often hold dozens or even hundreds of related positions across time spreads, geographies, grade differentials, options structures, and physical-logistics commitments. By aggregating these components, traders and risk managers can evaluate net directional exposure, hedge ratios, physical-financial alignment, and delivery obligations. Aggregation can occur by product (for example, all WTI exposure), region (such as a European gas book), tenor (such as the prompt month), or risk factor (such as Delta or Vega). It supports portfolio optimisation, value-at-risk measurement, credit assessment, and compliance monitoring. Aggregation is especially important in power markets where nodal, zonal, and hub-level exposures can interact non-linearly due to congestion and losses. In natural gas markets, aggregation may consolidate exposure across pipeline systems, storage facilities, hubs, and basis differentials. In crude and refined product markets, it may reconcile futures, swaps, and physical cargos into a coherent exposure profile. Without aggregation, firms would lack a clear understanding of their true market risk.