Trading Oil on International Markets

Duration:5 DAYS

This five-day program provides delegates with a comprehensive understanding of the economics of trading and the management of inherent price risks. Delegates will learn how to negotiate and cost deals, calculate profitability, charter a ship through a broker, and examine the legal and operational aspects of trading. They will also gain the skills to identify and manage risk by using futures, forwards, and over-the-counter markets.

During the practical exercises, delegates work as part of a trading team and make decisions using real-time information and prices from Reuters trading screens and daily price reports from Platts and Petroleum Argus to manage and maximize the profit of a fictional trading book. The corporate position will be marked to market and reviewed on a daily basis, with comprehensive debriefs studying the consequences of the decisions made.

WHO SHOULD ATTEND

This course will benefit those coming into trading from elsewhere in the industry; those in supply and marketing functions looking for a wider understanding of the market; those in oil companies, banks, law firms, accountancy practices, the media, and elsewhere who interface with traders and trading; and those moving into oil markets from the financial markets or elsewhere.

LECTURE SESSIONS

INTRODUCTORY MATERIAL

  • Introduction to trading and markets
  • Price reporting
  • Pricing mechanisms

CRUDE OIL TRADING

  • International pricing of crude oils
  • Crude oil trading
  • Brent / BFOE market

PRODUCTS TRADING

  • Mechanics of trading products
  • Oil brokering
  • Costings
  • Comparing alternative outlets
  • Arbitrage trading
  • Valuing product quality

CONTRACTS AND TRADING

  • Negotiating a deal
  • Writing a contract
  • Calculating the profitability of deals
  • Spread trading
  • Contango and backwardation
  • Exchange for physical (EFP)
  • Legal issues

TENDERING

  • Preparing and evaluating a tender

CHARTERING AND FREIGHT

  • Calculating freight costs using Worldscale
  • Chartering a ship
  • Calculating demurrage
  • Freight exposure and swaps

PERFORMANCE AND CREDIT

  • Client/counterpart risk
  • Documentation

RISK AND EXPOSURE

  • Identifying and minimizing risks in trading
  • Price exposure
  • Separation of price and supply

RISK MANAGEMENT INSTRUMENTS

  • Futures markets
  • Forward markets
  • Swaps and OTC markets
  • Introduction to options
  • Comparison of instruments

RISK MANAGEMENT TECHNIQUES

  • Hedging with futures and swaps
  • Basis risk
  • Refinery margin management
  • Technical analysis

TRADING CONTROLS

  • Managing a corporate position and mark to market

 

INSTRUCTORS