Professional Training

International Oil Trading - Advanced Techniques and Strategic Price Risk Management

Mennta Energy Solutions , In Singapore
3 days
3 days
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Course description

International Oil Trading - Advanced Techniques and Strategic Price Risk Management is an instructor-led course presented by the energy training experts at Mennta Energy Solutions. This course covers the advanced trading techniques applicable to the management of price risk in international oil trading. Through a variety of case studies, delegates will learn the techniques involved in trading and how to address day-to-day problems of managing the price risk associated with the role of producer, refinery or consumer with an integrated trading position. Much of the work will be carried out in syndicate groups where delegates will learn to develop and manage trading strategies designed to maximise corporate profitability and reduce exposure to losses arising from the price fluctuations. It is recommended that delegates should either have attended TR0 or TR1 or have a strong working knowledge of the subjects covered in these courses.

After reviewing the background of supply, refining and transportation, the course focuses on the key markets, pricing and the mechanisms involved in trading. Aspects of the various exposures encountered in trading are covered. Advanced trading instruments of swaps, CFDs and options are presented in detail, both from a theoretical and practical point of view, giving the delegates an insight into the application of these instruments in the development and management of a successful trading strategy. Syndicate exercises will address each skill required, providing the delegate with the essential tools and knowledge to successfully manage the price and accompanying risks of their strategy. Additionally, during the week, in a continuous theme case study, each syndicate group will manage their own company positions of equity production, refining supply, product disposal and speculative trading, identifying the pricing risk of new positions and reacting to changing market prices which simulate a live situation.

Please note: a laptop and up-to-date version of Office would be an advantage in order to engage in market data; however it is not essential.

What You Will Learn

  • The significance of freight costs key to trading and how these may be hedged
  • How international crude oils and products are priced
  • How to trade in the futures and forwards markets
  • How to use and understand the EFPs, swaps and CFDs
  • Option theory and the factors affecting options trading
  • The management of price risk within trading positions through the application of hedging techniques
  • Freight hedging
  • The development and management of successful trading strategies for the producer, refiner and the consumer
  • The essentials of constructing purchase/sale contracts and arising exposures

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Structure of the (Crude Oil) Tanker, Petroleum Products, Chemical and Gas Carrier Markets


  • Physical markets
  • Forward markets
  • Futures markets
  • Liquidity
  • Price volatility

Crude Oil and Product Markets

  • Why trade?
  • Supply/demand
  • How the markets work

Shipping and Freight

  • Freight and Worldscale
  • Demurrage
  • Freight hedging


  • Overview of processes
  • Yields and netbacks


  • Price reporting
  • Pricing mechanisms
  • Price risk


  • Outline structure and clauses
  • Issues and problems

Product Trading

  • How to sell a cargo
  • Brokers and traders
  • Trading strategies
  • World product markets
  • Arbitrage
  • Product specs and quality
  • Implied values of quality
  • Intermediate valuation

Crude Trading

  • Trading strategies, putting on a position/taking it off
  • The world of crude oil markets and how they work
  • Market fundamentals
  • Hedging and basis risks
  • Pricing techniques
  • Contract risks
  • Arbitrage
  • Term deals
  • Counterparty evaluation/selection

Futures Markets

  • The exchanges and the contracts
  • Commissions/brokers
  • Margining/span
  • Delivery versus cash settlement
  • Delivery - ADP, EFP
  • Limit up/down
  • Open interest/volume
  • Basis risk
  • Trading strategies with futures

Technical Analysis

  • Charting
  • Statistical/rule based

Other Risks and Exposures

  • Credit control and exposure
  • Bill of Lading and letters of indemnity
  • Demurrage
  • Inspection, loss and demurrage claims
  • Quality disputes

Introduction to Advanced Instruments

  • Spreads and basis trading
  • CFDs and swaps
  • Options

Basis Risks

  • Grade (Brent v. WTI)
  • Region (Med. V. US Gulf)
  • Time (Spot v. +1)
  • Contact (Forward v. Futures)


  • The markets
  • Contracts for Differences
  • Pricing mechanisms
  • Trading strategies
  • Swaps v. Futures or Forwards
  • Margining
  • Master swap agreement

Traded Options

  • Terms used
  • Puts and calls
  • Buying v. selling
  • Risk v. obligations
  • Simple trading strategies
  • Option valuation and Black Scholes
  • In/out of money
  • Premiums
  • Instrinsic values and time values
  • Volatility historic and implied
  • Significance of, gamma, delta, vega, theta
  • OTC Options, American, Asian, European

Trading Strategies

  • The producer
  • The refiner
  • The consumer
  • The management and assessment of pricing risk

Case Studies and Exercises Include:

  • Freight and netback
  • Purchase/Sale of products
  • Arbitrage
  • Negotiating a term crude oil deal
  • Hedging of term deal
  • Handling non performance
  • Executing an EFP
  • Managing ongoing positions
  • Executing a CFD
  • Traded options
  • Refiner risk management
  • Producer risk management
  • Consumer risk management

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