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R.E.D.: Scaling Text Classification with Expert Delegation

With the new age of problem-solving augmented by Large Language Models (LLMs), only a handful of problems remain that have subpar solutions. Most classification problems (at a PoC level) can be solved by leveraging LLMs at 70–90% Precision/F1 with just good prompt engineering techniques, as well as adaptive in-context-learning (ICL) examples. What happens when you want to consistently achieve performance higher than that — when prompt engineering no longer suffices? The classification conundrum Text classification is one of the oldest and most well-understood examples of supervised learning. Given this premise, it should really not be hard to build robust, well-performing classifiers that handle a large number of input classes, right…? Welp. It is. It actually has to do a lot more with the ‘constraints’ that the algorithm is generally expected to work under: low amount of training data per class high classification accuracy (that plummets as you add more classes) possible addition of new classes to an existing subset of classes quick training/inference cost-effectiveness (potentially) really large number of training classes (potentially) endless required retraining of some classes due to data drift, etc. Ever tried building a classifier beyond a few dozen classes under these conditions? (I mean, even GPT could probably do a great job up to ~30 text classes with just a few samples…) Considering you take the GPT route — If you have more than a couple dozen classes or a sizeable amount of data to be classified, you are gonna have to reach deep into your pockets with the system prompt, user prompt, few shot example tokens that you will need to classify one sample. That is after making peace with the throughput of the API, even if you are running async queries. In applied ML, problems like these are generally tricky to solve since they don’t fully satisfy the requirements of supervised learning or aren’t cheap/fast enough to be run via an LLM. This particular pain point is what the R.E.D algorithm addresses: semi-supervised learning, when the training data per class is not enough to build (quasi)traditional classifiers. The R.E.D. algorithm R.E.D: Recursive Expert Delegation is a novel framework that changes how we approach text classification. This is an applied ML paradigm — i.e., there is no fundamentally different architecture to what exists, but its a highlight reel of ideas that work best to build something that is practical and scalable. In this post, we will be working through a specific example where we have a large number of text classes (100–1000), each class only has few samples (30–100), and there are a non-trivial number of samples to classify (10,000–100,000). We approach this as a semi-supervised learning problem via R.E.D. Let’s dive in. How it works simple representation of what R.E.D. does Instead of having a single classifier classify between a large number of classes, R.E.D. intelligently: Divides and conquers — Break the label space (large number of input labels) into multiple subsets of labels. This is a greedy label subset formation approach. Learns efficiently — Trains specialized classifiers for each subset. This step focuses on building a classifier that oversamples on noise, where noise is intelligently modeled as data from other subsets. Delegates to an expert — Employes LLMs as expert oracles for specific label validation and correction only, similar to having a team of domain experts. Using an LLM as a proxy, it empirically ‘mimics’ how a human expert validates an output. Recursive retraining — Continuously retrains with fresh samples added back from the expert until there are no more samples to be added/a saturation from information gain is achieved The intuition behind it is not very hard to grasp: Active Learning employs humans as domain experts to consistently ‘correct’ or ‘validate’ the outputs from an ML model, with continuous training. This stops when the model achieves acceptable performance. We intuit and rebrand the same, with a few clever innovations that will be detailed in a research pre-print later. Let’s take a deeper look… Greedy subset selection with least similar elements When the number of input labels (classes) is high, the complexity of learning a linear decision boundary between classes increases. As such, the quality of the classifier deteriorates as the number of classes increases. This is especially true when the classifier does not have enough samples to learn from — i.e. each of the training classes has only a few samples. This is very reflective of a real-world scenario, and the primary motivation behind the creation of R.E.D. Some ways of improving a classifier’s performance under these constraints: Restrict the number of classes a classifier needs to classify between Make the decision boundary between classes clearer, i.e., train the classifier on highly dissimilar classes Greedy Subset Selection does exactly this — since the scope of the problem is Text Classification, we form embeddings of the training labels, reduce their dimensionality via UMAP, then form S subsets from them. Each of the S subsets has elements as n training labels. We pick training labels greedily, ensuring that every label we pick for the subset is the most dissimilar label w.r.t. the other labels that exist in the subset: import numpy as np from sklearn.metrics.pairwise import cosine_similarity def avg_embedding(candidate_embeddings): return np.mean(candidate_embeddings, axis=0) def get_least_similar_embedding(target_embedding, candidate_embeddings): similarities = cosine_similarity(target_embedding, candidate_embeddings) least_similar_index = np.argmin(similarities) # Use argmin to find the index of the minimum least_similar_element = candidate_embeddings[least_similar_index] return least_similar_element def get_embedding_class(embedding, embedding_map): reverse_embedding_map = {value: key for key, value in embedding_map.items()} return reverse_embedding_map.get(embedding) # Use .get() to handle missing keys gracefully def select_subsets(embeddings, n): visited = {cls: False for cls in embeddings.keys()} subsets = [] current_subset = [] while any(not visited[cls] for cls in visited): for cls, average_embedding in embeddings.items(): if not current_subset: current_subset.append(average_embedding) visited[cls] = True elif len(current_subset) >= n: subsets.append(current_subset.copy()) current_subset = [] else: subset_average = avg_embedding(current_subset) remaining_embeddings = [emb for cls_, emb in embeddings.items() if not visited[cls_]] if not remaining_embeddings: break # handle edge case least_similar = get_least_similar_embedding(target_embedding=subset_average, candidate_embeddings=remaining_embeddings) visited_class = get_embedding_class(least_similar, embeddings) if visited_class is not None: visited[visited_class] = True current_subset.append(least_similar) if current_subset: # Add any remaining elements in current_subset subsets.append(current_subset) return subsets the result of this greedy subset sampling is all the training labels clearly boxed into subsets, where each subset has at most only n classes. This inherently makes the job of a classifier easier, compared to the original S classes it would have to classify between otherwise! Semi-supervised classification with noise oversampling Cascade this after the initial label subset formation — i.e., this classifier is only classifying between a given subset of classes. Picture this: when you have low amounts of training data, you absolutely cannot create a hold-out set that is meaningful for evaluation. Should you do it at all? How do you know if your classifier is working well? We approached this problem slightly differently — we defined the fundamental job of a semi-supervised classifier to be pre-emptive classification of a sample. This means that regardless of what a sample gets classified as it will be ‘verified’ and ‘corrected’ at a later stage: this classifier only needs to identify what needs to be verified. As such, we created a design for how it would treat its data: n+1 classes, where the last class is noise noise: data from classes that are NOT in the current classifier’s purview. The noise class is oversampled to be 2x the average size of the data for the classifier’s labels Oversampling on noise is a faux-safety measure, to ensure that adjacent data that belongs to another class is most likely predicted as noise instead of slipping through for verification. How do you check if this classifier is working well — in our experiments, we define this as the number of ‘uncertain’ samples in a classifier’s prediction. Using uncertainty sampling and information gain principles, we were effectively able to gauge if a classifier is ‘learning’ or not, which acts as a pointer towards classification performance. This classifier is consistently retrained unless there is an inflection point in the number of uncertain samples predicted, or there is only a delta of information being added iteratively by new samples. Proxy active learning via an LLM agent This is the heart of the approach — using an LLM as a proxy for a human validator. The human validator approach we are talking about is Active Labelling Let’s get an intuitive understanding of Active Labelling: Use an ML model to learn on a sample input dataset, predict on a large set of datapoints For the predictions given on the datapoints, a subject-matter expert (SME) evaluates ‘validity’ of predictions Recursively, new ‘corrected’ samples are added as training data to the ML model The ML model consistently learns/retrains, and makes predictions until the SME is satisfied by the quality of predictions For Active Labelling to work, there are expectations involved for an SME: when we expect a human expert to ‘validate’ an output sample, the expert understands what the task is a human expert will use judgement to evaluate ‘what else’ definitely belongs to a label L when deciding if a new sample should belong to L Given these expectations and intuitions, we can ‘mimic’ these using an LLM: give the LLM an ‘understanding’ of what each label means. This can be done by using a larger model to critically evaluate the relationship between {label: data mapped to label} for all labels. In our experiments, this was done using a 32B variant of DeepSeek that was self-hosted. Giving an LLM the capability to understand ‘why, what, and how’ Instead of predicting what is the correct label, leverage the LLM to identify if a prediction is ‘valid’ or ‘invalid’ only (i.e., LLM only has to answer a binary query). Reinforce the idea of what other valid samples for the label look like, i.e., for every pre-emptively predicted label for a sample, dynamically source c closest samples in its training (guaranteed valid) set when prompting for validation. The result? A cost-effective framework that relies on a fast, cheap classifier to make pre-emptive classifications, and an LLM that verifies these using (meaning of the label + dynamically sourced training samples that are similar to the current classification): import math def calculate_uncertainty(clf, sample): predicted_probabilities = clf.predict_proba(sample.reshape(1, -1))[0] # Reshape sample for predict_proba uncertainty = -sum(p * math.log(p, 2) for p in predicted_probabilities) return uncertainty def select_informative_samples(clf, data, k): informative_samples = [] uncertainties = [calculate_uncertainty(clf, sample) for sample in data] # Sort data by descending order of uncertainty sorted_data = sorted(zip(data, uncertainties), key=lambda x: x[1], reverse=True) # Get top k samples with highest uncertainty for sample, uncertainty in sorted_data[:k]: informative_samples.append(sample) return informative_samples def proxy_label(clf, llm_judge, k, testing_data): #llm_judge – any LLM with a system prompt tuned for verifying if a sample belongs to a class. Expected output is a bool : True or False. True verifies the original classification, False refutes it predicted_classes = clf.predict(testing_data) # Select k most informative samples using uncertainty sampling informative_samples = select_informative_samples(clf, testing_data, k) # List to store correct samples voted_data = [] # Evaluate informative samples with the LLM judge for sample in informative_samples: sample_index = testing_data.tolist().index(sample.tolist()) # changed from testing_data.index(sample) because of numpy array type issue predicted_class = predicted_classes[sample_index] # Check if LLM judge agrees with the prediction if llm_judge(sample, predicted_class): # If correct, add the sample to voted data voted_data.append(sample) # Return the list of correct samples with proxy labels return voted_data By feeding the valid samples (voted_data) to our classifier under controlled parameters, we achieve the ‘recursive’ part of our algorithm: Recursive Expert Delegation: R.E.D. By doing this, we were able to achieve close-to-human-expert validation numbers on controlled multi-class datasets. Experimentally, R.E.D. scales up to 1,000 classes while maintaining a competent degree of accuracy almost on par with human experts (90%+ agreement). I believe this is a significant achievement in applied ML, and has real-world uses for production-grade expectations of cost, speed, scale, and adaptability. The technical report, publishing later this year, highlights relevant code samples as well as experimental setups used to achieve given results. All images, unless otherwise noted, are by the author Interested in more details? Reach out to me over Medium or email for a chat!

With the new age of problem-solving augmented by Large Language Models (LLMs), only a handful of problems remain that have subpar solutions. Most classification problems (at a PoC level) can be solved by leveraging LLMs at 70–90% Precision/F1 with just good prompt engineering techniques, as well as adaptive in-context-learning (ICL) examples.

What happens when you want to consistently achieve performance higher than that — when prompt engineering no longer suffices?

The classification conundrum

Text classification is one of the oldest and most well-understood examples of supervised learning. Given this premise, it should really not be hard to build robust, well-performing classifiers that handle a large number of input classes, right…?

Welp. It is.

It actually has to do a lot more with the ‘constraints’ that the algorithm is generally expected to work under:

  • low amount of training data per class
  • high classification accuracy (that plummets as you add more classes)
  • possible addition of new classes to an existing subset of classes
  • quick training/inference
  • cost-effectiveness
  • (potentially) really large number of training classes
  • (potentially) endless required retraining of some classes due to data drift, etc.

Ever tried building a classifier beyond a few dozen classes under these conditions? (I mean, even GPT could probably do a great job up to ~30 text classes with just a few samples…)

Considering you take the GPT route — If you have more than a couple dozen classes or a sizeable amount of data to be classified, you are gonna have to reach deep into your pockets with the system prompt, user prompt, few shot example tokens that you will need to classify one sample. That is after making peace with the throughput of the API, even if you are running async queries.

In applied ML, problems like these are generally tricky to solve since they don’t fully satisfy the requirements of supervised learning or aren’t cheap/fast enough to be run via an LLM. This particular pain point is what the R.E.D algorithm addresses: semi-supervised learning, when the training data per class is not enough to build (quasi)traditional classifiers.

The R.E.D. algorithm

R.E.D: Recursive Expert Delegation is a novel framework that changes how we approach text classification. This is an applied ML paradigm — i.e., there is no fundamentally different architecture to what exists, but its a highlight reel of ideas that work best to build something that is practical and scalable.

In this post, we will be working through a specific example where we have a large number of text classes (100–1000), each class only has few samples (30–100), and there are a non-trivial number of samples to classify (10,000–100,000). We approach this as a semi-supervised learning problem via R.E.D.

Let’s dive in.

How it works

simple representation of what R.E.D. does

Instead of having a single classifier classify between a large number of classes, R.E.D. intelligently:

  1. Divides and conquers — Break the label space (large number of input labels) into multiple subsets of labels. This is a greedy label subset formation approach.
  2. Learns efficiently — Trains specialized classifiers for each subset. This step focuses on building a classifier that oversamples on noise, where noise is intelligently modeled as data from other subsets.
  3. Delegates to an expert — Employes LLMs as expert oracles for specific label validation and correction only, similar to having a team of domain experts. Using an LLM as a proxy, it empirically ‘mimics’ how a human expert validates an output.
  4. Recursive retraining — Continuously retrains with fresh samples added back from the expert until there are no more samples to be added/a saturation from information gain is achieved

The intuition behind it is not very hard to grasp: Active Learning employs humans as domain experts to consistently ‘correct’ or ‘validate’ the outputs from an ML model, with continuous training. This stops when the model achieves acceptable performance. We intuit and rebrand the same, with a few clever innovations that will be detailed in a research pre-print later.

Let’s take a deeper look…

Greedy subset selection with least similar elements

When the number of input labels (classes) is high, the complexity of learning a linear decision boundary between classes increases. As such, the quality of the classifier deteriorates as the number of classes increases. This is especially true when the classifier does not have enough samples to learn from — i.e. each of the training classes has only a few samples.

This is very reflective of a real-world scenario, and the primary motivation behind the creation of R.E.D.

Some ways of improving a classifier’s performance under these constraints:

  • Restrict the number of classes a classifier needs to classify between
  • Make the decision boundary between classes clearer, i.e., train the classifier on highly dissimilar classes

Greedy Subset Selection does exactly this — since the scope of the problem is Text Classification, we form embeddings of the training labels, reduce their dimensionality via UMAP, then form S subsets from them. Each of the subsets has elements as training labels. We pick training labels greedily, ensuring that every label we pick for the subset is the most dissimilar label w.r.t. the other labels that exist in the subset:

import numpy as np
from sklearn.metrics.pairwise import cosine_similarity


def avg_embedding(candidate_embeddings):
    return np.mean(candidate_embeddings, axis=0)

def get_least_similar_embedding(target_embedding, candidate_embeddings):
    similarities = cosine_similarity(target_embedding, candidate_embeddings)
    least_similar_index = np.argmin(similarities)  # Use argmin to find the index of the minimum
    least_similar_element = candidate_embeddings[least_similar_index]
    return least_similar_element


def get_embedding_class(embedding, embedding_map):
    reverse_embedding_map = {value: key for key, value in embedding_map.items()}
    return reverse_embedding_map.get(embedding)  # Use .get() to handle missing keys gracefully


def select_subsets(embeddings, n):
    visited = {cls: False for cls in embeddings.keys()}
    subsets = []
    current_subset = []

    while any(not visited[cls] for cls in visited):
        for cls, average_embedding in embeddings.items():
            if not current_subset:
                current_subset.append(average_embedding)
                visited[cls] = True
            elif len(current_subset) >= n:
                subsets.append(current_subset.copy())
                current_subset = []
            else:
                subset_average = avg_embedding(current_subset)
                remaining_embeddings = [emb for cls_, emb in embeddings.items() if not visited[cls_]]
                if not remaining_embeddings:
                    break # handle edge case
                
                least_similar = get_least_similar_embedding(target_embedding=subset_average, candidate_embeddings=remaining_embeddings)

                visited_class = get_embedding_class(least_similar, embeddings)

                
                if visited_class is not None:
                  visited[visited_class] = True


                current_subset.append(least_similar)
    
    if current_subset:  # Add any remaining elements in current_subset
        subsets.append(current_subset)
        

    return subsets

the result of this greedy subset sampling is all the training labels clearly boxed into subsets, where each subset has at most only classes. This inherently makes the job of a classifier easier, compared to the original classes it would have to classify between otherwise!

Semi-supervised classification with noise oversampling

Cascade this after the initial label subset formation — i.e., this classifier is only classifying between a given subset of classes.

Picture this: when you have low amounts of training data, you absolutely cannot create a hold-out set that is meaningful for evaluation. Should you do it at all? How do you know if your classifier is working well?

We approached this problem slightly differently — we defined the fundamental job of a semi-supervised classifier to be pre-emptive classification of a sample. This means that regardless of what a sample gets classified as it will be ‘verified’ and ‘corrected’ at a later stage: this classifier only needs to identify what needs to be verified.

As such, we created a design for how it would treat its data:

  • n+1 classes, where the last class is noise
  • noise: data from classes that are NOT in the current classifier’s purview. The noise class is oversampled to be 2x the average size of the data for the classifier’s labels

Oversampling on noise is a faux-safety measure, to ensure that adjacent data that belongs to another class is most likely predicted as noise instead of slipping through for verification.

How do you check if this classifier is working well — in our experiments, we define this as the number of ‘uncertain’ samples in a classifier’s prediction. Using uncertainty sampling and information gain principles, we were effectively able to gauge if a classifier is ‘learning’ or not, which acts as a pointer towards classification performance. This classifier is consistently retrained unless there is an inflection point in the number of uncertain samples predicted, or there is only a delta of information being added iteratively by new samples.

Proxy active learning via an LLM agent

This is the heart of the approach — using an LLM as a proxy for a human validator. The human validator approach we are talking about is Active Labelling

Let’s get an intuitive understanding of Active Labelling:

  • Use an ML model to learn on a sample input dataset, predict on a large set of datapoints
  • For the predictions given on the datapoints, a subject-matter expert (SME) evaluates ‘validity’ of predictions
  • Recursively, new ‘corrected’ samples are added as training data to the ML model
  • The ML model consistently learns/retrains, and makes predictions until the SME is satisfied by the quality of predictions

For Active Labelling to work, there are expectations involved for an SME:

  • when we expect a human expert to ‘validate’ an output sample, the expert understands what the task is
  • a human expert will use judgement to evaluate ‘what else’ definitely belongs to a label L when deciding if a new sample should belong to L

Given these expectations and intuitions, we can ‘mimic’ these using an LLM:

  • give the LLM an ‘understanding’ of what each label means. This can be done by using a larger model to critically evaluate the relationship between {label: data mapped to label} for all labels. In our experiments, this was done using a 32B variant of DeepSeek that was self-hosted.
Giving an LLM the capability to understand ‘why, what, and how’
  • Instead of predicting what is the correct label, leverage the LLM to identify if a prediction is ‘valid’ or ‘invalid’ only (i.e., LLM only has to answer a binary query).
  • Reinforce the idea of what other valid samples for the label look like, i.e., for every pre-emptively predicted label for a sample, dynamically source c closest samples in its training (guaranteed valid) set when prompting for validation.

The result? A cost-effective framework that relies on a fast, cheap classifier to make pre-emptive classifications, and an LLM that verifies these using (meaning of the label + dynamically sourced training samples that are similar to the current classification):

import math

def calculate_uncertainty(clf, sample):
    predicted_probabilities = clf.predict_proba(sample.reshape(1, -1))[0]  # Reshape sample for predict_proba
    uncertainty = -sum(p * math.log(p, 2) for p in predicted_probabilities)
    return uncertainty


def select_informative_samples(clf, data, k):
    informative_samples = []
    uncertainties = [calculate_uncertainty(clf, sample) for sample in data]

    # Sort data by descending order of uncertainty
    sorted_data = sorted(zip(data, uncertainties), key=lambda x: x[1], reverse=True)

    # Get top k samples with highest uncertainty
    for sample, uncertainty in sorted_data[:k]:
        informative_samples.append(sample)

    return informative_samples


def proxy_label(clf, llm_judge, k, testing_data):
    #llm_judge - any LLM with a system prompt tuned for verifying if a sample belongs to a class. Expected output is a bool : True or False. True verifies the original classification, False refutes it
    predicted_classes = clf.predict(testing_data)

    # Select k most informative samples using uncertainty sampling
    informative_samples = select_informative_samples(clf, testing_data, k)

    # List to store correct samples
    voted_data = []

    # Evaluate informative samples with the LLM judge
    for sample in informative_samples:
        sample_index = testing_data.tolist().index(sample.tolist()) # changed from testing_data.index(sample) because of numpy array type issue
        predicted_class = predicted_classes[sample_index]

        # Check if LLM judge agrees with the prediction
        if llm_judge(sample, predicted_class):
            # If correct, add the sample to voted data
            voted_data.append(sample)

    # Return the list of correct samples with proxy labels
    return voted_data

By feeding the valid samples (voted_data) to our classifier under controlled parameters, we achieve the ‘recursive’ part of our algorithm:

Recursive Expert Delegation: R.E.D.

By doing this, we were able to achieve close-to-human-expert validation numbers on controlled multi-class datasets. Experimentally, R.E.D. scales up to 1,000 classes while maintaining a competent degree of accuracy almost on par with human experts (90%+ agreement).

I believe this is a significant achievement in applied ML, and has real-world uses for production-grade expectations of cost, speed, scale, and adaptability. The technical report, publishing later this year, highlights relevant code samples as well as experimental setups used to achieve given results.

All images, unless otherwise noted, are by the author

Interested in more details? Reach out to me over Medium or email for a chat!

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Phillips 66, Kinder Morgan move forward with Western Gateway pipeline with secured shipper interest

Phillips 66 Co. and Kinder Morgan Inc. have secured sufficient shipper interest to advance the proposed Western Gateway refined products pipeline project to supply fuel to ‌Arizona and California, the companies said in a joint release Apr. 20. Following a second open season to secure long-term shipper commitments, the companies will “move the project forward, subject to the execution of definitive transportation service agreements, joint venture agreements, and respective board approvals,” the companies said. “Customer response during the open season underscores the importance of Western Gateway in addressing long term refined products logistics needs in the region,” said Phillips 66 chairman and chief executive officer Mark Lashier. “By utilizing existing pipeline assets across multiple states along the route, we’re uniquely well-positioned to support a refined products transportation solution,” said Kim Dang, Kinder Morgan chief executive officer. Western Gateway pipeline specs The planned 200,000-b/d Western Gateway project is designed as a 1,300-mile refined products system with a new-build pipeline from Borger, Tex. to Phoenix, Ariz., combined with Kinder Morgan’s existing SFPP LP pipeline from Colton, Calif. to Phoenix, Ariz., which will be reversed to enable east-to-west product flows into California. It will be fed from supplies connected to Borger as well as supplies already connected to SFPP’s system in El Paso, Tex. The Gold Pipeline, operated by Phillips 66, which currently flows from Borger to St. Louis, will be reversed to enable refined products from midcontinent refineries to flow toward Borger and supply the Western Gateway pipeline. Western Gateway will also have connectivity to Las Vegas, Nev. via Kinder Morgan’s 566-mile CALNEV Pipeline. The Western Gateway Pipeline is targeting completion by 2029.  Phillips 66 will build the entirety of the new pipeline and will operate the line from Borger, Tex., to El Paso, Tex. Kinder Morgan will operate the line from El

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Viva Energy reports on Geelong refinery status following fire

Viva Energy Group Ltd. has stabilized operations at its 120,000-b/d Geelong refinery in Victoria, Australia, which continues operating at reduced rates following a mid-April fire in the site’s gasoline complex. In an Apr. 20 update to the market, Viva Energy confirmed the Apr. 15 fire specifically occurred in the complex’s alkylation unit and was not fully extinguished until the morning of Apr. 16. While the refinery’s crude distillation units and reformer continue operating, the site’s residue catalytic cracking unit (RCCU) remains temporarily offline as part of ongoing stabilization efforts, according to the company. In the near term, Viva Energy said it expects the refinery’s diesel and jet fuel production to average about 80% normal capacity, with gasoline output reduced to about 60% capacity. The company anticipates production constraints to ease in the coming weeks, subject to inspection and restart of the RCCU, which would allow the refinery’s combined output diesel, jet fuel, and gasoline to exceed 90% of nameplate capacity until all necessary repairs are completed. With sufficient fuel inventories already on hand, Viva Energy said it remains well-positioned to maintain normal fuel supplies to customers during the production shortfalls. “The whole Viva Energy team understands how important our refinery is to the energy security of the country, especially at the current time. We will progressively restore production once we are confident that it is safe to do so, and do not expect any disruptions to fuel availability or price increases for Viva Energy’s customers as a result of this incident,” Scott Wyatt, Viva Energy’s chief executive officer, said in a separate statement. While the company confirmed an assessment of damage to the alkylation unit and associated systems is under way, estimated timelines for full repairs and financial impacts resulting from the fire have yet to be determined. Alongside prioritizing

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Oil prices plunge following full reopening of the Strait of Hormuz to commercial vessels

Oil prices plunged on Apr. 17, as geopolitical tensions in the Middle East showed signs of easing, following the full reopening of the Strait of Hormuz to commercial vessels. Global crude markets reacted sharply after Iran confirmed that the Strait of Hormuz is now “completely open” to commercial shipping during an ongoing ceasefire tied to regional conflict negotiations. The announcement marked a major turning point after weeks of disruption that had severely constrained global oil flows. Stay updated on oil price volatility, shipping disruptions, LNG market analysis, and production output at OGJ’s Iran war content hub. Brent crude fell by more than 10%, dropping to around $88–89/bbl, while US West Texas Intermediate (WTI) declined to the low $80s—both benchmarks hitting their lowest levels in over a month. The sell-off reflects a rapid unwinding of the geopolitical risk premium that had built up during the conflict. The reopening follows a fragile, 10-day ceasefire involving Israel and Lebanon, alongside tentative progress in US–Iran negotiations. While the waterway is now open, the US has maintained a naval blockade on Iranian ports, signaling that broader geopolitical risks have not fully dissipated. The return of tanker traffic through the Gulf could gradually restore millions of barrels per day to global markets, easing the tight conditions that had driven recent price volatility. However, some uncertainty remains over how quickly shipping activity will normalize and whether the ceasefire will hold. Despite the sharp price decline, the oil market remains structurally fragile. Weeks of disruption have depleted inventories and altered trade flows, and it may take time for supply chains to fully recover. Additionally, any breakdown in ceasefire talks could quickly reverse the current trend. Beyond energy markets, the development rippled across global financial systems. Equity markets surged, with major US indices posting strong gains as lower oil

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EIA: US crude inventories up 1.9 million bbl

US crude oil inventories for the week ended Apr. 17, excluding the Strategic Petroleum Reserve, increased by 1.9 million bbl from the previous week, according to data from the US Energy Information Administration (EIA). At 465.7 million bbl, US crude oil inventories are about 3% above the 5-year average for this time of year, the EIA report indicated. EIA said total motor gasoline inventories decreased by 4.6 million bbl from last week and are about 0.5% below the 5-year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 3.4 million bbl last week and are about 8% below the 5-year average for this time of year. Propane-propylene inventories increased by 2.1 million bbl from last week and are 69% above the 5-year average for this time of year, EIA said. US crude oil refinery inputs averaged 16.0 million b/d for the week, which was 55,000 b/d less than the previous week’s average. Refineries operated at 89.1% of capacity. Gasoline production increased, averaging 10.1 million b/d. Distillate fuel production increased, averaging 5.0 million b/d. US crude oil imports averaged 6.1 million b/d, up 787,000 b/d from the previous week. Over the last 4 weeks, crude oil imports averaged about 6.0 million b/d, 0.4% less than the same 4-week period last year. Total motor gasoline imports averaged 587,000 b/d. Distillate fuel imports averaged 190,000 b/d.

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How AI is changing copper, fiber networking

In a side-by-side comparison using 1.6 Tb/s ports, optical cables can consume up to 20 watts of power, vs. virtually none for copper. That gap has major implications at scale. In massive AI installations with thousands of connections, optical power draw can quickly add up to a meaningful share of a facility’s total energy usage. Despite its efficiency, copper has a hard physical limitation: distance. As data rates increase, the maximum length of passive copper cables shrinks dramatically. At common speeds—such as 1Gb/s—copper Ethernet cables can span long distances without issue. But at the speeds used inside AI systems, the story changes. At roughly 200 Gb/s per lane, passive copper connections are limited to only a few meters, typically around two to three meters. Beyond that, signal integrity breaks down and fiber becomes inevitable, said Shainer. This constraint shapes how modern data centers are built. Copper is ideal for scale‑up networking, such as connecting GPUs within the same rack, where distances are short. Scale‑out networking—linking racks across rows, halls, or entire buildings—requires fiber optics. Fiber also matches copper in raw speed potential. Both media can support extremely high data rates, but fiber maintains those speeds over vastly longer distances. The tradeoff is higher cost, greater fragility, and significantly higher power consumption. Copper cables are physically tough and difficult to damage. Fiber cables contain delicate glass strands that can break if bent or mishandled.

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Almost 40% of data center projects will be late this year, 2027 looks no better

Add to that the significant parts and components shortage as well as the growing revolt by both nearby residents living near proposed data center sites as well as state and local governments. OpenAI told the Financial Times,  “Our historic data center build-out is on schedule and we will accelerate from here. In partnership with Oracle, SB Energy and a broader ecosystem of partners, we are delivering rapid progress in Abilene, Shackelford County and Milam County in Texas,” while Oracle said,  “Each data center we’re developing for OpenAI is moving forward on time, and construction is proceeding according to plan.” Two construction executives working on OpenAI-linked projects said there were not enough specialist workers, from electricians to pipe fitters, to meet demand across the build-out as companies race to construct clusters of increasingly large and complex facilities. Data center construction is facing growing headwinds from all quarters. Umm the high hardware demands of AI’s data centers has resulted in a significant shortage of not only GPUs but also memory and storage. Hard drive makers are sold out through the end of this year and into next year and memories going for hundreds if not thousands of dollars. Power is another issue. GPUs especially our power hungry and the demands of data centers have gone through the roof. With the current grid unable to support the demands, data center providers are looking to provide their own power, namely through modular nuclear data centers. Nuclear power has come back into vogue after being on the outs for so many years. Then there’s the revolt of both citizens and governments. What started out as individual groups in cities and states opposing data centers has now moved on to the state of Maine putting a pause on all data center construction through next year, and

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Data centers are costing local governments billions

Tax benefits for hyperscalers and other data center operators are costing local administrations billions of dollars. In the US, three states are already giving away more than $1 billion in potential tax revenue, while 14 are failing to declare how much data center subsidies are costing taxpayers, according to Good Jobs First. The campaign group said the failure to declare the tax subsidies goes against US Generally Accepted Accounting Principles (GAAP) and that they should, since 2017, be declared as lost revenue. “Tax-abatement laws written long ago for much smaller data centers, predating massive artificial intelligence (AI) facilities, are now unexpectedly costing governments billions of dollars in lost tax revenue,” Good Jobs First said. “Three states, Georgia, Virginia, and Texas, already lose $1 billion or more per year,” it reported in its new study, “Data Center Tax Abatements: Why States and Localities Must Disclose These Soaring Revenue Losses.”

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Equinix offering targets automated AI-centric network operations

Another component, Fabric Application Connect, functions as a private, dedicated connectivity marketplace for AI services. It lets enterprises access inference, training, storage, and security providers over private connections, bypassing the public Internet and limiting data exposure during AI development and deployment. Operational visibility is provided through Fabric Insights, an AI-powered monitoring layer that analyzes real-time network telemetry to detect anomalies and predict potential issues before they impact workloads. Fabric Insights integrates with security information and event management (SIEM) platforms such as Splunk and Datadog and feeds data directly into Fabric Super-Agent to support automated remediation. Fabric Intelligence operates on top of Equinix’s global infrastructure footprint, which includes hundreds of data centers across dozens of metropolitan markets. The platform is positioned as part of Equinix Fabric, a connectivity portfolio used by thousands of customers worldwide to link cloud providers, enterprises, and network services. Fabric Intelligence is available now to preview.

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Blue Owl Builds a Capital Platform for the Hyperscale AI Era

Capital as a Service: The Hyperscaler Shift This is not just another project financing. It points to a model in which hyperscalers can externalize a significant portion of the capital required for AI campuses while retaining operational control. Under the Hyperion structure, Meta provides construction and property management, while Blue Owl supplies capital at scale alongside infrastructure expertise. Reuters described the transaction as Meta’s largest private capital deal to date, with the campus projected to exceed 2 gigawatts of capacity. For Blue Owl, it marks a shift in role: from backing developers serving hyperscalers to working directly with a hyperscaler to structure ownership more efficiently at scale. Hyperion also helps explain why this model is gaining traction. Hyperscalers are now deploying capital at a pace that makes flexibility a strategic priority. Structures like the Meta–Blue Owl JV allow them to continue expanding infrastructure without fully absorbing the balance-sheet impact of each new campus. Analyst commentary cited by Reuters suggested the arrangement could help Meta mitigate risk and avoid concentrating too much capital in land, buildings, and long-lived infrastructure, preserving capacity for additional facilities and ongoing AI investment. That is the service Blue Owl is effectively providing. Not just capital, but balance-sheet flexibility at a time when AI infrastructure demand is stretching even the largest technology companies. With major tech firms projected to spend hundreds of billions annually on AI infrastructure, that capability is becoming central to how the next generation of campuses gets built. The Capital Baseline Resets In early 2026, hyperscalers effectively reset the capital baseline for the sector. Alphabet projected $175 billion to $185 billion in annual capex, citing continued constraints across servers, data centers, and networking. Amazon pointed to roughly $200 billion, up from $131 billion the prior year, while noting persistent demand pressure in AWS. Meta

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OpenAI pulls out of a second Stargate data center deal

“OpenAI is embattled on several fronts. Anthropic has been doing very well in the enterprise, and OpenAI’s cash burn might be a problem if it wants to go public at an astronomical $800 billion+ valuation. This is especially true with higher energy prices due to geopolitics, and the public and regulators increasingly skeptical of AI companies, especially outside of the United States,” Roberts said. “I see these moves as OpenAI tightening its belt a bit and being more deliberate about spending as it moves past the interesting tech demo stage of its existence and is expected to provide a real return for investors.” He added, “I expect it’s a symptom of a broader problem, which is that OpenAI has thrown some good money after bad in bets that didn’t work out, like the Sora platform it just shut down, and it’s under increasing pressure to translate its first-mover advantage into real upside for its investors. Spending operational money instead of capital money might give it some flexibility in the short term, and perhaps that’s what this is about.” All in all, he noted, “on a scale of business-ending event to nothingburger, I would put it somewhere in the middle, maybe a little closer to nothingburger.” Acceligence CIO Yuri Goryunov agreed with Roberts, and said, “OpenAI has a problem with commercialization and runaway operating costs, for sure. They are trying to rightsize their commitments and make sure that they deliver on their core products before they run out of money.” Goryunov described OpenAI’s arrangement with Microsoft in Norway as “prudent financial engineering” that allows it to access the data center resources without having to tie up too much capital. “It’s financial discipline. OpenAI [executives] are starting to behave like grownups.” Forrester senior analyst Alvin Nguyen echoed those thoughts. 

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Microsoft will invest $80B in AI data centers in fiscal 2025

And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs).  In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023. Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025. Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads. Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.

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John Deere unveils more autonomous farm machines to address skill labor shortage

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Self-driving tractors might be the path to self-driving cars. John Deere has revealed a new line of autonomous machines and tech across agriculture, construction and commercial landscaping. The Moline, Illinois-based John Deere has been in business for 187 years, yet it’s been a regular as a non-tech company showing off technology at the big tech trade show in Las Vegas and is back at CES 2025 with more autonomous tractors and other vehicles. This is not something we usually cover, but John Deere has a lot of data that is interesting in the big picture of tech. The message from the company is that there aren’t enough skilled farm laborers to do the work that its customers need. It’s been a challenge for most of the last two decades, said Jahmy Hindman, CTO at John Deere, in a briefing. Much of the tech will come this fall and after that. He noted that the average farmer in the U.S. is over 58 and works 12 to 18 hours a day to grow food for us. And he said the American Farm Bureau Federation estimates there are roughly 2.4 million farm jobs that need to be filled annually; and the agricultural work force continues to shrink. (This is my hint to the anti-immigration crowd). John Deere’s autonomous 9RX Tractor. Farmers can oversee it using an app. While each of these industries experiences their own set of challenges, a commonality across all is skilled labor availability. In construction, about 80% percent of contractors struggle to find skilled labor. And in commercial landscaping, 86% of landscaping business owners can’t find labor to fill open positions, he said. “They have to figure out how to do

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2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

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OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

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