International Oil Trading and Pricing

Course Summary
This course covers the basic principles of oil trading and the markets. Through a variety of case studies, delegates will learn the techniques involved in trading and how to address day-to-day problems. During the week, in a continuous theme case study, syndicate groups will manage their own company positions of production, refinery supply, product purchase/disposal and speculative trading, while reacting to new positions generated and changing market prices which simulate a live situation. Delegates will have the opportunity to trade both structured and live markets. It is recommended that delegates should have attended "International Oil Supply, Transportation, Refining and Trading" (SP1) or have working knowledge of the subjects covered in that course.
After reviewing the background of supply, refining and transportation, the course focuses on the key markets, pricing and the mechanisms involved in trading. Aspects of the various exposures encountered in trading are covered together with an introduction to price risk management. Syndicate exercises will address each skill required. Additionally, during the week, in a continuous theme case study, each syndicate group will manage their own company positions of production, refinery supply, product purchase/disposal and speculative trading, reacting to new positions generated and changing market prices which simulate a live situation. Delegates will have the opportunity to trade both structured and live markets.
What You Will Learn
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The structure of the oil markets and pricing

Keys to trading: product quality, freight costs and refining process

Comprehend the Brent Market and its influence on international pricing

Position management with basic hedging tools

The structure of purchase/sales contracts including exposures and transactions

Price risk management

Developing successful trading strategies

The use of trading instruments to capture the market

Use of Freight Forwards to manage freight risk

Working the arbitrage

Structured and live markets
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Suitability:

• Personnel who are entering the trading arena
  
• Oil company staff who interface with the oil trading sector and require a better understanding of trading practice, such as management accounting, financial control, treasury, supply or production functions
  
• Those in the legal and banking fields who want a better understanding of trading practice
  

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Introduction

• Terms used
  
• Units used
  

Crude Oil and Product Markets

• Why trade?
  
• Supply/demand
  
• Ho- the markets work
  

Shipping and Freight

• Freight and Worldscale
  
• Charter party main terms
  
• Charter negotiation
  
• Demurrage
  
• Tanker characteristics
  
• Freight exposure and freight forwards
  

Refining

• Products, key qualities
  
• Overvie- of processes
  
• Yields and netbacks
  

Pricing

• Price reporting
  
• Pricing mechanisms
  
• Price risk
  

Contracts

• Outline structure and clauses
  
• Issues and problems
  

Price Risk

• Summary of markets (Physical, Forwards, Futures, Swaps)
  
• Understanding long and short positions
  
• Introduction to hedging tools
  
• Basic risks
  
• Significance of market inquiry
  

Product Trading

• Making a sale
  
• The role of the broker
  
• Developing successful trading strategies
  
• World product markets and pricing
  
• Capturing the arbitrage
  
• Product specs and quality
  
• Implied values of quality
  
• Intermediate valuation
  
• Futures markets
  
• Features of the key futures markets
  
• Volume, open interest and margins
  
• Delivery - ADP, EFP
  

Crude Trading

• The world crude oil markets
  
• Market fundamentals
  
• Developing successful trading strategies
  
• Negotiating term deals
  
• Other risks and exposures
  
• Bills of lading and other documents
  
• Credit control and letters of credit
  
• Counterparty selection
  
• Inspection and losses
  
• Insurance disputes claims
  
• Technical analysis
  
• Charting
  
• Statistical/rule based
  

Introduction to Advanced Instruments

• Options
  
• CFDs and swaps
  
• Spreads and basis trading
  

Case Studies and Exercises Included:

• GPW, freight and netback
  
• Arbitrage; Blending and value
  
• Negotiating a term crude oil deal
  
• Hedging and basis risk
  
• Executing an EFP
  
• Managing ongoing positions
  
• Introduction to options
  
• Trading the live market