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FINANCIAL MARKET COURSES

Commodities – Oil

Products derived from crude oil are varied; the most well-known is gasoline (petrol), while other products include heating oil, liquefied petroleum gas (LPG), naphtha, kerosene, gas oil, and fuel oil. With so many applications for which there are few or no substitutes, crude oil is certainly the world’s most important commodity. The faster economies grow, the greater their consumption of oil. This is why demand from developing countries such as China and India has risen dramatically in recent years. The price of crude oil is also highly sensitive to political developments, especially unrest in the Middle East.

 

This course outlines the main uses of crude oil and its derivative products, and describes how these are traded in the cash and derivatives markets.

  • OBJECTIVES

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

    Describe the key features of crude oil and its by-products

    Explain the fundamentals of crude oil pricing, and identify the various elements that affect the prices

    List the participants in the oil market

    Describe the process of hedging and trading in the crude oil market

  • COURSE OUTLINE

    Topic 1: Oil and Oil Products

    Crude Oil

    Leading Crude Oil By-Products

    Crude Oil by- Products with Highest Demand

    o Gasoline

    o Heating Oil

    Topic 2: Oil prices

    Factors Affecting Crude Oil Prices

    Other Factors Affecting Crude Oil Prices

    Crude Oil Benchmarks

    Oil Price Correlation

    o Correlation between the Various Oil Markets

    o Correlation of Oil against Other Markets

    Topic 3: Participants in the Oil Market

    Oil Market – Participants

    Oil Producers

    o Organization of Petroleum Exporting Countries (OPEC)

    o OPEC – Members

    Refiners

    o Spread - Exposure Management Techniques

    Oil Consumers

    o Factors Influencing Consumer Demand for Oil Products

    Institutional Investors

    Topic 4: Oil Trading

    Oil Trading-History

    Sport Market

    Derivatives Market

    o OTC Market

    o Exchange-Traded Market – New York Mercantile Exchange

    • NYMEX - contracts

    • Exchange- Traded Market – Intercontinental Exchange

    Futures & Options Traders

    o Short Hedge

    o Long Hedge

    o Strip Trade

    • Strip Trade Example

    o Crack Spread Trade

    • Crack Spread – Calculation

    • Crack Spread – Example

    • Purchasing a Crack Spread

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    90 Minutes

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