Crude Oil Trading and Risk Management

Crude Oil Trading and Risk Management

Crude Oil Trading and Risk Management

Course Overview

This 3-day course provides a comprehensive overview of Crude Oil pricing and risk management strategies. Each day has a clear focus covering first, the Crude Oil volatility and the value chain risk landscape from oilfield to refinery; benchmark pricing methodologies (Brent, Oman/Dubai and WTI), crude oil differentials and market structure; hedging of benchmark and differentials; and risk management monitoring and strategy, including VaR and other quantitative tools for risk evaluation, mitigation, monitoring and reporting. Each of the three days is sub-divided logically into manageable sub-topics to facilitate retention of the knowledge imparted during the course.

Learning Objectives

  • Understand the system of crude oil benchmark pricing and differentials
  • Understand how PRAs calculate Dated Brent, Oman/Dubai and WTI assessments
  • Know the basic structures for hedging crude oil sales and purchases
  • Become familiar with crude oil futures, options and swaps and their use in hedging
  • Master the calculations you need to manage risk relative to benchmarks
  • Understand how to lock in a trading margin using derivatives
  • Track GPW, GRM, crack spreads and transportation costs
  • Confidently discuss the technical terms, concepts and buzzwords with your peers and clients


Course Modules

  • Crude oil benchmarks and their use in physical and derivatives pricing
  • How crude oil deal parameters affect differentials to benchmarks
  • Identifying Risk Exposure: Drivers and Measurement of Crude Oil Volatility
  • The Crude Oil Derivatives Markets: Futures, Options, Swaps
  • Hedging and the Basic Principle of Risk Offsetting
  • Locking In Arbitrage Using Derivatives
  • Risk Management Strategy and Hedge Ratios
  • Hedging Crude Oil Refining Margins
  • Risk Measurement, Monitoring and Reporting

Who should attend?

Crude oil marketers, traders; refining industry planners; banking, finance execs; lawyers, accountants; oil company graduate trainees; power 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; independent exploration 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 3-Day programme provides a detailed knowledge of crude oil pricing and risk management. The course follows a logical order looking first at crude oil pricing, including how benchmark prices and grade differentials are set; using this to identify risk exposure from price and spread volatility; and then exploring the range of instruments that can be used to mitigate price risk.

The basic structures of commodity trading are systematically explained, including physical, forwards, futures, options and swap markets, and the interaction between the value of the physical crude oils and the instruments that are traded as derivatives.

The course explains how the 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 crude oil prices relative to refined products prices are explained, as well as the changing drivers of market volatility, and how these are relevant to risk management.

A comprehensive overview is provided of crude oil price risk management, including quantitative tools for risk analysis; volatility and correlation measures; calculating hedging ratios; risk-offsetting and basis risk; liquidity risk management; modelling portfolio risk; Value-at-Risk (VaR) and other risk measures; and market risk reporting.


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 core 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. The course simplifies and explains the jargon and technical terms used in the oil market, with hands-on exercises and visual aids used to help delegates retain what they learn. 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.


Forecasting crude oil and oil products prices

Forecasting crude oil and oil products prices

Course title: Forecasting crude oil and oil products prices
Course Code: FCPP
Course summary: The 4-day course Forecasting Crude Oil and Oil Products Prices explains the key drivers of crude oil and oil product prices, and explains how these can be forecast in a logical and consistent manner over different time frames. The course outlines the three main forecasting techniques: fundamental analysis, technical analysis and econometric analysis, and explains their relevance to forecasting oil prices in particular time frames. An approach to forecasting oil products prices based on crude oil prices is outlined, using a model of refining margins and then allocating the oil product crack spreads within this framework based on the fundamental supply-demand outlook for individual oil products. Key exogenous factors that may impact prices are identified, and consideration is also given of the potential impact of new technology on the fundamentals of supply and demand in the future. The use of high/low and base case scenarios, and the concept of nominal and constant dollar forecasts are explained.

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