Principles of International Oil Trading
Date: 6 - 8 Oct 2008
Venue: Cape Town, South
Africa
Code: TR0\BRSA08
Course Director: Mr Robin
Burley
Cost: GBP£1650
Course Summary
This course covers the basic principles of international oil
trading, and the allied fields of supply, transportation and refining. Through
the medium of a case study, delegates will address day to day problems, and
will understand the relevant commercial driving forces in this area. Much of
the work will be carried out in syndicate groups where teams will simulate real
in-company practice, working with other delegates drawn from a wide background
of disciplines in the industry. Delegates are introduced to the key elements
affecting the international market of oil trading. Crude valuation, ocean
tanker transport and freight are explored together with a basic overview of
terminals and pipelines. The structure of a refinery will be explained in the
context of the need to produce marketable products. Aspects of product quality
will be covered together with the key refining processes needed to achieve
them.
After reviewing the background of supply, refining and
transportation, the course focuses on the key markets, pricing and the
mechanisms involved in international oil trading. Aspects of the various
exposures encountered in trading are covered together with an introduction to
price risk management. Syndicate exercises will address each skill required.
Additionally, during the week, delegates are given the opportunity to trade in
the current market via a simulation of live trading. There are no
pre-requisites for this course, nor is any advanced preparation required.
8 CPE credits per training day awarded for this course
What You Will Learn
- The structure of the oil markets - physical and paper
- Knowledge of freight costs key to trading
- How to evaluate spot tanker freight costs
- How oil and tankercontracts are structured
- How a refinery is configured
- Key points on product quality
- How key specifications are met
- How crudes and products are priced
- How to value crude oil based on product market prices and
netbacks
- How and why trading is carried out
- How to execute a trade
- The essentials of constructing purchase/sale contracts
- Contract exposures and costs
- The use of hedging
- Basic tools available for hedging and position management
Who Should Attend?
- Personnel who are entering the international trading
market
- Staff who interface with the trading sector and require a
better understanding of trading practice such as management accounting,
controllers, treasury or supply functions
- Those in the legal and banking fields who want a better
understanding of trading practice
- Managers changing disciplines into Supply and Trading
- Professional personnel inside and outside oil companies
interfacing with supply, refining, trading and transportation functions and who
need an overview of this sector – such as legal, banking, insurance,
finance and production.
Course Contents
Introduction
Crude Oil and Product Markets
- Why trade?
- Supply/demand
- How the markets work
Crude Oil
- Types
- Assay
- Yield
- Crude value
- Calculation of gross product worth and netback
The Refinery
- Structure of simple, upgrading and complex refineries
- Refinery margins
- Processing deals
Product Quality
- Key specifications for main grades
- How quality specifications are achieved
- Cost implications of quality
Shipping and Freight
- Freight and Worldscale
- Main terms
- Demurrage
- Tanker characteristics
Primary Logistics
- Pipelines, terminals
- Losses
Contracts
- Oil contract terms
- Tanker contracts (charterparty)
Oil Markets and Price Risk
- Location and nature of pricing
- Crude oil
Products
- Forward markets
- Futures markets
- Derivatives
- Liquidity, open interest, margin
- Price reporting
- Pricing mechanisms
Other Risks and Exposures
- Credit control and exposure
- Bills of lading and letters of indemnity
- Letter of credit
- Non performance
- Demurrage
- Inspection and loss
- Brokerage
- Insurance
Product Trading
- How to sell a cargo
- Brokers and traders
- Position keeping
- Mark to market P&L
- Trading strategies
- World product markets
- Arbitrage
- Product specs and quality
- Implied values of quality
- Intermediate valuation
Crude Trading
- The world crude oil markets and how they work
- Trading strategies, putting on a position/taking it off
- Hedging and basis risks
- Pricing techniques
- Arbitrage
- Term deals
Futures Markets
- Their operation and use
- Margins
- Delivery - ADP, EFP
Introduction to Advanced Instruments
- Options
- CFDs and swaps
- Spreads and basis trading
Case Studies and Exercises Include:
- Gross product worth
- Freight
- Refining margin and processing, Netback
- Contracts
- Quality, blending and value
- Handling quality change
- Handling operational risk
- Negotiating a term crude oil deal
- Hedging of term deals
Request brochure and registration
form
Click here to
request a brochure and registration form for this course.
