Course description
ICE Education and TwoTwoFive bring together their physical and derivative Crude Oil markets expertise, to deliver an immersive and interactive learning experience.
Delivered live online in eight 2-hour sessions over 4-days (with a Break day in the middle), the trading concepts will be decoded in a bite-sized manner to reveal the key methodologies and intricacies behind them.
In addition, you will be able to practice what you have learnt by playing realistic trading scenarios via a unique trading simulator allowing you to experience the psychological challenges a trader has to endure daily.
Suitability - Who should attend?
- If your work is affected by the changes to the international price of oil
- oil industry staff working supply, trading risk management, refining, finance, transportation and E&P
- Oil trading and distribution companies
- Energy-related government departments
- Purchasing, planning and finance departments in major energy consumers
- Energy publications
- Bankers, accountants, auditors and others associated with oil companies and oil financing.
Training Course Content
Day 1:
- Derivatives:
What is trading and why do companies trade. Explains some trading terminology. What is a crude oil derivative? What is the difference between forwards, futures, swaps, and options are? How they are connected, EFP, EFS. How a futures exchange works. How traders use crude oil.
Simulations: Up to 3 trading simulations where delegates will be able to trade futures, swaps, and forwards.
- Trading Best Practice:
What is risk. The different types of risk - price, credit, operational, reputational. How risk can be managed successfully by a trader. Technical analysis. How risk is measured, what is VAR and how is it used. Trading lessons - common pitfalls.
Simulations: 2 trading simulations where delegates will be able to trade Brent futures within a VAR trading limit.
Day 2:
- Time Spreads:
What is spread trading/different types of spread. Principles of spread trading. What a forward curve is and market structure. Different types of market structure and what they signify. How traders use time spreads.
Simulations: 2 trading simulations where delegates will be able to trade Brent and WTI futures within a VAR trading limit
- Cargo Price Exposures:
What is physical cargo trading. Physical delivery terms. Factors that influence supply/demand. Crude oil quality. Contractual considerations. Price reporting agencies - who are they and what they do. Explains floating prices and benchmark prices. What is crude oil differential trading?
Simulations: 2 trading simulations where delegates will be able to trade North Sea and West African physical crude oil cargoes
Day 3:
- Arbitrage:
Explains physical arbitrage. Different aspects of crude oil. Voyage chartering/Time charter. Bareboat charter. Contract of affreightment. Worldscale - what it is and how it works. Operational costs of arbitrage. Financial risks. When traders arbitrage. Netback calculation
Simulations: 2 trading simulations where delegates will be able to trade American, North Sea and Middle Eastern physical crude oil cargoes, charter vessels and manage price risk exposures
- Hedging:
Why hedge. Basis risk. Swaps as hedging instruments. Types of hedging. A detailed example of hedging fixed price/floating price cargoes. Operational impact on pricing.
Simulations: Up to 3 trading simulations where delegates will be able to apply arbitrage and unwinding hedges and charter vessels as physical cargoes price in/out
Day 4:
- Storage:
What is storage/why store oil. The costs/benefits associated with storing oil. When traders store oil. Types of market structure. How to hedge a storage play. Intrinsic and Extrinsic Value.
Simulations: 2 trading simulations where delegates will be able to store American and European crude oil cargoes and apply hedges to capture the storage play
- Team Dynamics:
How to extract value from a physical crude oil portfolio. Why speedy evaluation of opportunities is critical. Why teamwork is important. Applying all the trading concepts learnt across a portfolio. Understanding the value of tenders.
Simulations: Working as a team, the delegates will apply all the trading concepts across a portfolio of crude oil cargoes, trading spot cargoes, entering tenders, hedging, arbitrage, seeking storage opportunities and speculatively trading the futures markets with flat price and spreads positions.
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