Oil Trader Academy
Course
In London
Description
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Type
Course
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Level
Intermediate
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Location
London
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Class hours
100h
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Duration
2 Weeks
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Start date
Different dates available
This programme will appeal to: oil and product traders, refiners, economists portfolio manager, risk manager, operations managers, brokers, related front, middle and back office staff and all those needing to gain or improve their knowledge and understanding of crude oil and petroleum products trading and pricing mechanisms
Facilities
Location
Start date
Start date
About this course
This course comprises two modules. You can participate in the whole course or in one of them Module 1: 'Physical Crude & Products Trading' Date: 28 July – 1 August 2014; Module 2: 'Trading Simulation, Paper Trading & Price Risk Mgmt' Date: 4 August – 8 August 2014. The course will be fully interactive with teams analysing positions and learning through case study and trading simulation. The participants of the course will be issued an International Certificate of the ICE Futures.
Reviews
Subjects
- Oil and Gas
- Trading
- Oil Exploration
Teachers and trainers (5)
Chris Heilpern
Trader
Chris Heilpern traded oil and energy in Europe, Africa, the Middle East and Asia during a career that spanned eighteen years. He has worked for an oil major, a top trading company, and investment banks. He has extensive experience in supply and trading for refining systems as well as the challenges of running proprietary physical trading books in Europe, Africa, and Asia. His experience was rounded out with several years of trading derivatives for investment banks in the Asia-Pacific region. Since leaving trading in 2008 Chris has taught finance and trading at top French business schools,
Dr. Ken Mildwaters
World-renowned legal expert specialising in the field of natural resou
In a career spanning more than 30 years he has practised law as a partner with leading English and Australian law firms, Theodore Goddard, Jackson McDonald and Kott Gunning. Dr Mildwaters is a member of the faculty at the Centre for Petroleum and Mineral Law Studies at the University of Dundee. Globally, he has presented numerous papers and conducted workshops in the fields of natural resources law, joint ventures and joint operating agreement, negotiation skills and managing in-house legal functions.
John Fry
Lecturer
Julian Lee
Senior Energy Analyst, Centre for Global Energy Studies
Mr Lee joined the Centre for Global Energy Studies at its creation in 1989. He specialises in global oil market analysis and the oil industries of the former Soviet Union and sub-Saharan Africa, overseeing all the CGES’ work in these latter areas.
Paul Terry
Head of Supply
Paul has spent 20 years of his career working in oil trading. He was regarded as an industry expert in the area of trading operations for crude oils in the North Sea and Middle East before progressing to a senior leadership position within BP’s international trading division. As Head of Supply Paul was directly responsible for the trading teams which were optimising the purchase and risk management of 75 million m3 p.a. of petroleum products. More recently Paul was the Executive Chairman of Smart Global Trading.
Course programme
28 July – 1 August 2014, ICE Futures Europe, London, UK
Day 1
Fundamentals of oil and gas
Basic principles
· Upstream marginal and average costs
· Capital intensity
· Exploration and Production
· Crude oil characteristics
· Refining
· Oil industry structure
· Oil price volatility
The geography of oil and gas
Oil demand
· Global demand growth
· Shifting balances between OECD and Non-OECD
· The changing balance of products
Oil Production
· Major producing regions
· Production trends
· Oil trade
· Major oil trade flows
OPEC
· The role of OPEC
Modelling the oil market
· Why do we want to model the oil market?
· Modelling demand
· Oil price determination
· Oil inventories
Oil market outlook
· What drove oil prices to $150/bbl in 2008 – Futures of fundamentals?
· What stopped the collapse early in 2009?
· What is driving the price rebound?
· Where will oil prices go from here?
· Is oil price stability possible?
Day 2
An overview of supply and demand balances
· Growth of shale in the US
· Increase of non-OECD demand
· The change in oil flow
Crude oil trading – what to look for, and where the value lies
· Assay evaluation versus gross product worth
· What a refiner looks for
· Long-term contracts and spot markets and who is involved
Crude oil pricing
· The benchmarks and why they exist
· The value of the differential
· Arbitrage cargoes
Trading simulation
· Teams bid to buy a cargo of crude oil
· Application of theory developed earlier in the day
Day 3
Understanding the Brent complex
· Brent futures versus Brent Forwards
· Brent forwards versus Dated Brent
· The value of time and North sea supply and demand
Capturing market information
· Price discovery and transparency
· The market on close assessment process
· Looking at the information available to all market participants
Understanding the price risk involved in crude oil trading
· B/L pricing versus average of the month
· Market structure
· Trading structure through CFD market
Selling the cargo to a refiner
· Using the knowledge of freight costs teams offer the cargo to refiners
· B/L pricing – NOR pricing – average of month pricing
· Hedging the cargo and managing price risk
Day 4
The refiner processes the crude oil and sells the products
· An overview of the refining industry and processes
· Simple versus complex refining
· What a trader is looking for
Product usage and product quality
· Usage defines quality requirements
· Qualities differ in the world
· Quality optimisation by traders
Hedging product risk
· The need for the swap contract
· Contract structure
· Use in trading
Hedging the refinery margin
· Crude pricing versus product pricing
Day 5
— Legal Contracts: Types, Issues & how to manage them
· The Players
· Crude Oil Market Structure
Long-Term Contracts
· Issues with change of circumstances
· Spot Market Contracts
· Characteristics of the market
· Areas of markets
· Standard terms
FOB Crude Oil Contracts
· Free on board
· Duties of seller and buyer
· Passing of property
CIF Crude Oil Contracts
· Cost, insurance and freight, variations, out-turn clause
· Terms relating to deliver on arrival
· Duties of seller and buyer
· The goods, quantity and quality
· Shipment period and place, appropriation, shipping documents, tender of documents, passing of property
Delivery Terms
Price and Pricing Formula
Shipping Procedure
Payment
Legal Aspects
· Text and email contracts
· Bills of lading, letters of credit, letters of indemnity, performance bonds
· Nomination
· Laytime and demurrage
· Certificates of quantity, quality and originality
· Taxes, charges and expenses
Warranties
· Free of encumbrances, right to transfer
Dispute Resolution
Lifting and Balancing Agreements
Module 2: Trading Simulation, Paper Trading & Price Risk Managemen
4 August – 8 August 2014, ICE Futures Europe • London, UK
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 longs and shorts
· Negotiate and enter deals, book ships, manage cargo 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 movements
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
Additional information
Oil Trader Academy