PRO - Price Risk Management in the Oil Industry
Course Dates: 10th - 14th November 2014 and 8th - 12th June 2015
Møller Centre, Churchill College, Cambridge , UK
Course fees: UK Pounds £3,550 plus VAT*only applicable to UK residents
As a member of a trading team, you learn to identify and manage exposure to price risk. You'll trade the full range of derivative markets, including the live futures markets through online screen services. You'll also work with simulation software to learn about using options.
Delegates compare the performance of different instruments over time and changing market conditions and learn how to choose the appropriate instrument to match their objectives.
The course explains the workings of futures, forwards, swaps and options markets and how they can be used for hedging and price management purposes.
The costs and relative benefits of the instruments and the implementation of a risk management strategy are explored as well as technical analysis and the principles of management control.
Exercises are performed in syndicates, with comprehensive debriefs to study the consequences of the decision made. The course expects a high degree of participation from delegates and there is a high staff to pupil ratio.
Day 1 Identification of risk within the corporate position; futures markets; hedging with futures; spread trading; refinery margin hedging.
Day 2 Technical analysis of price charts; forward markets and CFDs; trading in crude oil forward markets; separation of price and supply; EFPs; hedging efficiency; introduction to options.
Day 3 Options hedging strategies; delta hedging; non-directional option strategies; intermediate options theory; using options pricing software; simulated options trading.
Day 4 Hedging with swaps and other over the counter instruments; trigger pricing; the role of the market maker; comparison of hedging strategies.
Day 5 Implementing a risk management strategy; principles of management and risk control; middle office role , VAR etc.
What will you learn?
By the end of the course you will be able to:
- Identify price exposure in your company's activities
- Analyse price charts
- Trade futures, forward and swaps markets
- Hedge cargoes and longer term positions using forwards, futures, swaps and options
- Manage refinery margin risk
- Use contracts for difference (CFDs) to manage contango/backwardation risk in the dated/paper Brent markets
- Separate price and supply and maintain control over pricing using EFPs and triggers
- Examine and compare the cost and effectiveness of different options strategies
You will understand:
- The forces driving the physical, forward, futures and other derivative (swaps and options) markets
- The mechanisms of trading on the forward markets and the associated risks and rewards
- Option theory and factors determining prices
- The need for management control systems
- The role of the market makers and operation of the over-the-counter market.
Who should attend?
Anyone whose work is affected by changes in the international oil price including those in:
- Supply, trading, risk management, refining, finance, transportation, E&P in the oil industry
- Oil trading and distribution companies
- Energy-related government departments
- Purchasing, planning and finance in major energy consumers
- Energy publications
- Banks, accountants, auditors and others associated with oil companies and oil financing