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Oil Price Volatility and Risk Management

Introduction

The Oil & Gas industry is essential and decisive in steering the global economy. The Oil & Gas business is diverse, technically complex, highly capital intensive, and often confronted with potential risks and uncertainties. Today’s oil companies are dealing with ever-increasing levels of complexity and competition. Purchase, Sales, Marketing, Trading, and Risk Management are crucial and the most active parts of the hydrocarbon value chain, and extremely important for managers and industry leaders to stay on top of these activities.

This 5-day accelerated Oil Price Volatility and Risk Management training course is designed to give delegates a thorough picture of crude oil, refined products, biofuel markets, risks, and legal and regulatory issues involved in the international crude oil trading and these products. It is presented with the petroleum industry's wide range of essential engineering practices spanning exploration, extraction, refining, global oil supply, reserves, production & trade flows. The associated risks and uncertainties can be fully understood with an overview of these essential practices. Since price volatility always exists, how Price Risk Management is conducted utilizing appropriate financial derivatives and techniques is presented in detail in this training. 


Course Objectives

  • Gain business acumen in the wide-ranging subjects of upstream production to the downstream sales, marketing, and trading of crude oil, refined and renewable products
  • Understand the critical crude oil and refined products pricing dynamics and the use of pricing benchmarks
  • Develop price-risk management strategies using hedging instruments
  • Acquire essential legal and regulatory issues relating to trading in the global markets.
  • Reduce the overall risk of the Petroleum Industry and maximize the value chain profitability
  • Fully understand the business of upstream, midstream, and downstream oil, refined products, and biofuels
  • Comprehend refining processes, compute refinery margins, manage refined products and biofuels price risks
  • Master the essential practices of sales, marketing, and trading of crude oil and refined products 
  • Learn to develop and negotiate general sales contracts, term contracts, and spot contracts
  • Understand the International oil supply dynamics and geopolitics and effectively reduce the business risks


Target Audience

  • Business & Development Managers
  • Sales, Marketing, and Trading Managers
  • Lawyers & Law Firms' Personnel
  • Geoscientists, Engineers, and Refiners
  • Bankers, Accountants
  • Auditors
  • Media Personnel who interface with traders and trading
  • Government Regulators
  • Tax & Finance Advisors
  • Compliance Officers
  • Equity and Financial Analysts
  • Joint Venture Officers
  • Negotiators
  • Those who are into Trading


Course Outline

Day 1: Introduction to Crude Oil: A Finite Resource

  • Introduction to the Upstream Oil & Gas Industry
  • Fundamentals of Oil & Gas Geology and Petroleum Engineering
  • Oil & Gas Reserves, Production, Consumption & Trade
  • The Impact of The Shale Industry
  • Trends in Carbon Emissions, Carbon Capture, Utilization, and Storage
  • Basic Refining and Refining Complexity
  • Refining Economics


Day 2: The Market Price Volatility of Crude Oil

  • The Driving Factors of Oil Price Volatility
  • Different Strategies
  • International Oil Trade
  • Anatomy of The Crude Oil Pricing System
  • Prices on The Oil Markets
  • The Importance of Energy Security and Geopolitics


Day 3: Introductory Concepts in Oil Trading

  • The Technical Analysis of Trading
  • The Fundamental Analysis of Trading
  • Trading on The Oil Markets
  • The Spot Markets
  • Spot Crude Oil Prices
  • The Brent Market
  • Indexing Crude Oil Prices


Day 4: Petroleum Products Price Setting Mechanism using Financial Derivatives

  • Hedging – Risk Management
  • How are Prices Reported?
  • The Physical Futures Markets
  • The Financial Futures Markets
  • The Historical Development of The Petroleum Exchanges
  • Futures Contracts
  • Pricing Structures: Backwardation and Contango
  • The Limitations of The Futures Markets


Day 5: Risk Management using Financial Derivative Swaps and Options

  • The Definition of An Option
  • The use of Options Contracts to protect the National Income of NOCs
  • The Definition of a Swap
  • The Historical Development of The Petroleum Exchanges
  • USA, UK, Singapore