Day 1
Oil Trading I
- Chemistry of crude oil
- Purpose of oil trading and refining
- Benchmark crudes and Brent and WTI (key specifications)
- Location and nature of pricing, implications to quality, logistics, freight, and chartering
Market Fundamentals and Value Chain
- Supply and demand trends, structure, sectors, trading regions, pricing, inventories, political risks, security
- Paper markets (future, EFP) and Physical Markets (Brent,Dubai, WTI)
- Operations (extraction, transportation, shipping and refining)
- Stages of refining, Catalytic cracking, Thermal cracking, Coking
Basic Derivative Trading
- Time value of money and interest rates
- Underlying prices and indices
- Contingent claims, arbitrage valuation and forward contracts
- Case-study: Structuring tailor-made financial forwards
Actual Commodity Forward and Futures Trading
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Forward and futures contracts
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Energy and shipping fright forwards
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Basis risk and optimal hedging ratio
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Case-Study: Building a forward curve compatible with quoted prices
Risk management using Derivative Structures
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The risk matrix approach: typology and identification
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Mark-to-market value of standing positions
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Structuring forward strategies
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Structuring swap strategies to handle price and FX risk
Oil Trading II
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Trading principles: Where and how energy futures contracts are traded, Contango, Backwardation and storage plays, long vs short, intermonth, intercommodity and intermarket spreads, market volume, open interest, liquidity
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Use of technical analysis
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Commercial aspects of crude oil selection and influence on refinery selections
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Grades of crude, product specifications
Day 2
Oil Trading III
- Refining needs and requirements and market influences
- Economics of refining different oil streams into finished products
- Significance to the refiner of the product specifications, shipper and end user
- Optimal refinery operation plan (refinery margins)
- Major trading patterns and locations
- Refined product consumption patterns and trends
- Key value drivers on crude and product markets: Oil Storage/ Arbitrages / Spreads / Hedge funds/ technicals/ Geopolitical risk and other drivers in the market.
Oil Trading IV
- Oil contract terms, quality, quantity, nomination
- Documentation, L/C, breach of contract, damage, charter party, Insurance
- Dispute resolution, performance and operational risk, demurrage
- Credit policy, oil price exposure and price management
- Legal and regulatory risk and compliance
Crude and product trading strategies
- Price differentials and arbitrage
- Storage plays
- Refining strategies
- Linear structures
Aggregate Risk Measurement and Risk Management
- Principal components analysis of forward market data
- How to deal with seasonality effect
- Forward market scenario simulation and P&L calculation
- Case-study: PFE assessment of complex commodity portfolios
Hedging long term contract and load deals
- Volatility, correlation, and cross-commodity risk
- Value-at-Risk assessment of flow positions
- RAROC-based risk measures and hedging strategies
- Case-study: Managing risk of long-term commitments