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FINANCIAL MARKET COURSES

Commodities – Natural Gas

Natural gas is the fastest growing primary energy source in the world. Its use in electricity generation has become increasingly important as it is a cleaner fuel. The natural gas market is mainly a localized one because gas is difficult and expensive to transport across borders.

 

This course describes the fundamentals of the natural gas market, as well as the trading processes and players involved in the market. It also explains how natural gas price risk can be hedged using derivative instruments.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Describe the key features of natural gas and the participants in the natural gas market

    Explain how natural gas is traded in the spot and derivatives market

    Describe the process of hedging in the natural gas market

  • COURSE OUTLINE

    Topic 1: Natural Gas Market

    What is Natural Gas?

    Characteristics of Natural Gas

    Demand for Natural Gas

    Participants in the Natural Gas Market

    Price of Natural Gas

    Topic 2: Trading in Natural Gas

    Spot Market

    Gas Interconnection Hubs

    Derivatives Market

    Derivatives Market Listed Derivatives

    o The New York Mercantile Exchange

    o Intercontinental Exchange

    o Natural Gas Exchange

    Topic 3: Risk Management Hedging Natural Gas Prices

    Hedging Natural Gas Prices

    Hedging Natural Gas Prices – forwards/ futures

    Short Hedge – an Example

    Long Hedge – An example

    Spread Trading – Spark Spread

    Spread Trading – Frac Spread

    Options

    Non Standard OTC Option Structures

    Fixed-For-Floating Swap

    Swaps

    o Fixed-for-Floating Swap

    o Basis Swap

    o BTU Swap

    o Structured Natural Gas Swaps

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    75 Minutes

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