Course Overview

This 3-day course provides a comprehensive overview of Refined Products pricing and risk management strategies, including LPG, Gasoline, Naphtha, Kerosene, Diesel/Gasoil, Marine Fuels and Intermediate and Residual Products. Each day has a clear focus covering first, the Refined Products risk landscape from the refinery to the consumer; market structure and benchmark pricing methodologies published by S&P Global Commodities/Platts and Argus for price assessments of underlying commodity and derivatives; the availability of hedging instruments; risk management strategies and quantitative tools such as VaR used for risk evaluation, mitigation, monitoring and reporting.

Learning Objectives

  • Understand pricing methodology for each of the main refined oil products
  • Explain how Price Reporting Agencies make assessments in Europe, Asia, Middle East and Americas
  • Understand availability of hedging instruments including swaps, futures and options
  • Learn the basics of putting on a hedge and locking-in a trading margin
  • Know how to develop a risk management strategy based on cash-flow at risk
  • Master calculations that you need to understand volatility and correlation
  • Learn how to implement a risk control strategy
  • Confidently discuss the technical terms, concepts and buzzwords with your peers and clients

Course Modules

  • LPG Pricing and Market Struture
  • Transportation Fuels Pricing and Market Structure
  • Residuals and Intermediates Pricing and Market Structure
  • The Refined Products Derivatives Markets
  • Hedging and Speculation
  • Locking in an Arbitrage
  • Risk management strategy and hedge ratios
  • Volatility and correlation measures
  • Risk Measurement, Monitoring and Reporting

Who should attend?

Refined products marketers, traders; refining industry planners; banking, finance execs; lawyers, accountants; oil company graduate trainees; industrial companies with exposure to oil prices; refined product end-users. Banks with a presence in the commodities markets; swaps sales and marketing staff; regulatory and taxation authorities; oil refiners; National Oil Companies; oil and commodities traders; business development staff at futures exchanges; fund managers; private equity executives.

Course Director

Peter Stewart is a highly experienced analyst in the oil and gas markets. He was a director of the British Institute of Energy Economics (2013-2021) and has written extensively for the Oxford Institute of Energy Studies and the Oxford Energy Forum. He runs the training and consulting firm Resource Economist Ltd, and has worked as associate with a number of large consulting firms including IPA Advisory Ltd and KBC Energy Economics. He has been an expert advisor to the energy ministries of Norway and Angola on oil trading. Peter has many years experience in the trading and pricing of oil and gas, having worked for nearly 20 years with the pricing agency Platts, in London, the Middle East and Asia. Peter is a qualified executive leadership coach and is accredited with the European Mentoring and Coaching Council. Peter has written a number of books with a business focus. He graduated in English and Oriental Studies from Emmanuel College, Cambridge in 1982.

Detailed Scope

This three-day programme provides a detailed knowledge of refined products pricing and risk management.

The basic structures of commodity trading are systematically explained, including physical, forwards, futures, options and swap markets. The course covers physical and derivatives pricing for LPG, gasoline, naphtha, kerosene, gasoil/diesel, marine fuels, and residual and intermediate products.

The course explains how the refined products benchmarks provided by Price Reporting Agencies such as Standard & Poors/Platts and Petroleum Argus are used in settlement of physical and derivative transactions. The drivers of refined product prices are explained, as well as the changing drivers of market volatility for each product group, and how these are relevant to risk management.

 This course provides a comprehensive overview of refined products risk management, including price formation in the underlying markets; price volatility and modelling energy prices; quantitative tools for risk analysis including volatility and correlation measures; hedging strategies and risk-offsetting; liquidity risk management; modelling portfolio risk; Value-at-Risk (VaR) and other risk measures; and market risk reporting. The interaction between the value of the physical refined products, price assessments and instruments that are traded as derivatives is explained clearly.

Course Delivery

The course is delivered over three days and is divided into 9 modules. Each module takes around 1.5 hours to complete, so around 4.5 hours per day of tuition and exercises (3 modules per day). The course can be delivered online or in person at the client’s office. The style of tuition is informal, friendly and highly interactive, with regular recaps of key course material provided. Delegates are encouraged to ask questions at the end of each module. Exercises and questionnaires are provided for overnight scrutiny to allow delegates to consolidate the intensive course materials provided.

For full details and a list of course modules please click on the link below:

Refined Products RM – course outline