Overview of Physical Crude Oil Trading and Operations
Overview of Physical Crude Oil Trading and Operations - CT
CPE Credits Awarded: 16
Categories: Trading, Derivatives, Hedging and Risk Management, The Oil Industry, Oil Supply and Trading
This course provides an introduction to the trading of physical crude oil. Delegates will gain an understanding of the knowledge possessed by a physical crude oil trader and the steps involved in negotiating a physical crude oil transaction. In addition, delegates will be given an overview of crude oil quality, vessel and pipeline transportation, and the terminology associated with this facet of the petroleum industry. Energy futures contracts and over the counter instruments are also covered in this course offering. There are periodic quizzes and a trading game in the course, and these reinforce the course material.
As this is an introductory course, there are no prerequisites. As part of our blended learning package, this workshop has a specific web-based course which is recommended as pre-classroom study. Upon registering for the workshop delegates will receive details of how to access the web-based course. Access to the web-based course is included in the price of the classroom course. To optimize your classroom experience, it is recommended you take the appropriate online study as close to the classroom date as possible. The recommended pre-classroom study for this workshop is PrincetonLive.com's An Introduction to the Oil Industry.Prerequisites
Pre-classroom Study
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This course is designed for those individuals new to the crude trading area and anyone interacting with the crude oil trading personnel in their company. Specifically, operations, mid-office and back office employees would benefit from the material offered in this course. The course assumes no prior crude oil trading experience.
Introduction
- What is crude oil?
Industry Components
- Major components of an integrated oil company
- What does each area do?
Upstream Sector
- How crude traders interface with upstream
- Areas where is crude oil produced
Midstream Sector
- How is crude oil transported?
- trucks, vessels, and pipelines
- Locations of crude oil markets
- Who trades crude oil?
- Evolution of crude prices
Downstream Sector
- Definition of refining processes
- Overview of worldwide refining
Crude Oil Characteristics
- Major crude oil quality factors
- gravity, sulfur, pour point, and viscosity
- The most commonly-traded crudes
- Synthetic crude and non-conventional crude sources
Crude Oil Pricing
- Benchmark crudes
- Major markets where crude is typically traded
- Term contracts
- Definition of a spot transaction vs. term deal
- How are crude prices determined?
- Netback calculations and GPW
- Physical markets
Paper Trading
- Definition of terminology within Paper markets
- Differentiation of oil futures vs. physical
- Futures markets locations and specification
- OTCs vs. futures
- Who uses futures? – market players and their roles
- Definition of EFP
- Brent crude oil traded markets
- Forwards and Swaps
Reasons For Trading Physical Crude Oil
- Why do companies trade crude oil?
- Refinery supply optimization and crude selection
- System balancing
- Trading for profit
Influences on Crude Oil Trading Decisions
- Fundamental analysis
- Definition of OPPEC and its role
- Locations of crude reserves and strategic storage
- Refinery shutdowns
- Crude inventories
Crude Oil Price Drivers
- Market structure – contango and backwardation
- Economic factors that affect supply and demand
- Geo-political factors
- Technical analysis
- Using fundamentals and Technical Analysis together
The Art of the Trade
- Trader networks and socializing
- How is a trade actually negotiated?
- Types of international purchases
- The terms negotiated in a crude oil deal
Crude Oil Operations, Credit, and Legal
- LOA definition
- Vessel chartering
- Different types of crude oil tankers
- Worldscale – definition and calculation
- Demurrage – definition and charges
- Minimising shipping costs
- Crude oil pipelines and scheduling
- Payments for crude oil transactions – credit issues and forms of security
- The role of lawyers in crude oil deals
Faculty
Course Director
Testimonials
“The course met all my expectations and will help me in my interactions with the business units my IT organization supports. This is a must course for all IT professionals in the oil and gas industry.” A.M., Tesoro
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