Oil Trader Academy

PROGRAMME:

Module 1 - Physical Crude Oil & Products Trading

(ICE Education Europe, London, UK 22 - 26 January 2024)

DAY 1. FUNDAMENTALS OF OIL AND GAS

Demand in the oil industry

• Demand drivers
• Changes and developments

Supply in the oil market

• Natural resources
• Unconventional supply
• Shale revolution

Oil refining

• Necessary link in the industry
• Types of refineries
• Economic challenges

A WORD ON OPEC

DAY 2. OVERVIEW OF TRADING

• Spot / Term / Forwards / Futures
• FOB vs CIF

Trading crude oil

• Choices in the industry
• Who we are defines how we trade

Risk in oil trading

• Contracts to manage risk
• Clauses and their value

Benchmarks and pricing

• Contango and backwardation
• The value of the differential

DAY 3 SHIPPING

Overview of the shipping industry

• Vessel sizes and trading choices
• Vessel acceptability
• Costs and ownership

Charterparty types

• Spot / Single Voyage
• Term charter

WORLDSCALE AND FREIGHT CALCULATIONS

DAY 4. CRUDE OIL PRICING AND MOVING OIL FROM A TO B

Crude oil pricing and moving oil from A to B

• The Brent complex
• Brent price relationships

Managing price risk in crude trading

• Understanding exposure
• Using futures
• Swaps (CFD's)
• Making a price in crude oil trading

DAY 5

Products trading

• Differences between crude and products trading
• Refining as a source of product
• Quality issues in a product markets

Price creation in a product markets

• Trading the arbitrage
• Locational value
• Understanding import and export parity

Making prices in a product markets

• Crack values

MODULE 2. Trading Simulation, Paper Trading & Price Risk Management(ICE Education Europe London, UK 29 January - 2 February 202)
DAY 1. UNDERSTAND WHAT DRIVES THE BRENT FUTURES PRICE
Trading Best Practice

• Trading best practice and discipline
• Useful trading rules

Physical Products, Freight and FOB/CIF

• What are Refined Products and their main uses
• How are Products priced and traded
• Understand Worldscale and Freight rates
• How to trade Products cargoes on a FOB and CIF basis

Physical Products Trading Simulation

• Manage a portfolio of physical Products longsand shorts
• Negotiate and enter deals, book ships, managecargo movements

Physical Crude Trading

• How Crude Oil is produced and exported
• What determines the value of different Crude Oils
• How Crude Oil is priced and traded, benchmark pricing

Physical Crude Cargoes Trading Simulation

• Buy and Sell cargoes of North Sea and West African Crude Oil
• Understand how refinery yields affect Crude differentials
• Appreciate the importance of liquidity in physical Crude markets

DAY 2
Introduction to Refining

• Basic Crude distillation and complex refining
• Refinery Optimisation activities
• Calculate Refinery margins and Crude pecking orders

Refining Simulation

• Manage a Refinery: Buy Crude and sell Products
• Calculate Refinery margins and adjust run rates accordingly
• Optimise your Refinery, switch Crudes as prices change

Spreads and Backwardation/Contango

• What are spreads and how are they calculated
• Why do traders use spreads
• Market structure – Contango/Backwardation

Time Spreads Simulation

• Trade upto 3 different spreads on European Gas Oil
• Understand how spreads react to fundamental news

Storage Valuation and Optimisation

• Contango markets: What do “carry” and “full carry” mean
• Valuing Storage and hedging Storage trades
• Optimising Storage: Intrinsic and Extrinsic value

Storage Valuation Exercise

• Value Storage offers and bid for capacity
• Design and execute hedging strategies for your storage

Storage Optimisation Simulation

• Use futures to manage a portfolio of physical oil and tankage
• Move oil in and out of storage as you react to market structure
• React to the volatility of time spreads and maximise extrinsic value

Trading Futures using Technicals

• Why use technical trading
• Common indicators used in technical trading; Trendlines; Moving
• Averages; Line/Candlesticks/Bar/Point & Figure; Retracements; Continuation and Reversal signs; Volume and Open Interest
• Examples of Technical Trades in current markets
• Technical Charting Simulation
• Trade techincals using Tradesignal’s professional chart analysis software
• Spot trends and use indicators to identify trade entry/exit points

DAY 3
Floating Prices and Hedging

• What is meant by a floating price
• Calculating the daily hedge, and forward pricing profiles
• Managing pricing risk on a portfolio of trades

Hedging Physical Cargoes Simulation

• Respond to new trades and manage the basic daily hedge
• Adjust hedges as BL dates and quantities change

Swaps and Hedging Spread Exposure

• What is a swap, and how are they traded
• Using swaps to manage risk and create trading strategies
• Differential swaps and CFD’s
• Managing spread exposure

Hedging with Swaps Simulation

• Respond to new trades and manage a complex daily hedge
• Use swaps and futures contracts to manage risk

Geographies and Arbitrage Spreads

• Regional supply/demand and its effect on spreads
• Spread trading strategies

Gas oil Arbitrage Spreads Simulation

• Trade the futures spread between Europe and U.S.
• Understand the impact of local supply/demand and physical arbitrage
• Hedging Physical Arbitrage Trades
• How to calculate and identify Arbitrage opportunities
• Relative volatilities: Futures, Cargoes and Freight
• Using futures to hedge Arbitrage movement

Arbitrage - Worked Example

• Use of a spreadsheet to calculate and monitor Arbitrage values
• Placing an Arbitage trade: Volatility, liquidity and order of trades
• Trans-Atlantic Crude Arbitrage Simulation
• Calculate Arbitrage opportunities across a portfolio of Crude Oils
• Place all the trades necessary to Arbitrage Crude Oil cargoes

DAY 4
Using the paper derivative markets

• Derivative instruments & hedging
• Practical: Hedging exercises
• Basic risk
• Basis trading

Spread trading

• Time
• Crack
• Arb
• CFD’s & DFL’s as part of the mix
• Using the EFP & EFS mechanisms
• Case Study practical:
• Hedging as a producer
• Hedging as a refiner
• Hedging as a consumer
• Trigger pricing

DAY 5. HOW CAN OPTIONS BECOME PART OF YOUR TRADING PORTFOLIO

• Options 101
• Inputs to the premium and pricing
• Practical: Hedging exercises
• Time & Volatility
• The greeks
• Options trading strategies
• Practical: Trading with Options