Energy Markets & Derivatives

Background & Objectives

Oil and Gas markets have recently shown explosive growth which many believe will continue over the next few years.  Less noticed has been the interesting and fruitful development of the Electricity and Carbon Emissions Derivatives Markets.


This 2 day course provides a coherent overview of the Trading and Derivatives available on all the major Energy products.  A basic knowledge of Traded Futures and Options is assumed - but not of these products. 





-         Hedge Funds looking at alternative products

-         Oil, Gas and Utility company executives

-     Energy & Commodity Traders considering new areas

-         Fund Managers wishing to widen their investment range

-         Private bankers and Pension Fund Advisors

-         Operations and Back Office staff

-         Accountants, Compliance and Auditors

-         IT Executives designing systems for processing these products

-         Government Regulators




Background to Energy Pricing & Derivatives

  • The different types of energy and energy markets
  • Energy market drivers
  • Market users and participants
  • Spot and Forward pricing
  • Forward curves, limitations of forwards and the changing shape of the forward curve
  • Calculating the convenience price and yield
  • Energy derivatives - Delta One
                   - Futures
                   - Pricing an energy swap
                   - Take or Pay contracts
  •  Energy derivatives - Options
                   - Option valuation using Blacks' 76
                   - Energy exotics - Asians, Spread and Swing
                   - Energy Caps, Floors and Collars

Oil Markets & Derivatives

  •  Introduction to oil - world reserves and production
  •   Crude types - sweet 'n' sour, Heavy 'n' light
  •   Marker crudes and benchmark pricing: WTI, Brent, Dubai etc
  •  Differential Swaps and spread swap
  •  The refining process and distillates markets
  •  Refining netbacks
  •  Pricing a Crack Spread
  •  Crack curves and using Cracks as distillate stock level predicators


The Coal Markets

  • Coal types and uses
  • Demand versus supply and reserves
  • Coal Pricing - International and USA
  • Coal price drivers
  • Coal pricing and freight costs
  • Trading coal


Natural Gas Markets & Derivatives

  • Natural Gas types
  • Gas market supply and demand: reserves and consumption
  • Gas market drivers
  • Transporting Gas
  • The US Gas market, Gas pipelines and Hubs
  • Delivery basis
  • Natural Gas basis swaps and spreads
  • The UK Natural Gas market, Gas network, pipes and beaches
  • The European Gas market
  • Natural Gas Storage
  • LNG
  • NGL and Fractionation spreads.  Calculating the shrink.


Electricity Markets 

  • Electricity markets & structure.  Price drivers
  • Electricity derivatives: forwards, swaps, spreads and options
  • Electricity forwards
  • Spark and Dark spreads
  • Calculating Spark and Dark spreads
  • The adjusted (clean) Spark spread

Carbon Markets & Emissions Trading

  • Greenhouse gases and  the Carbon markets
  • The Kyoto Protocol
  • Emission Trading Schemes: EU ETS Phase I & II
  • Clean Development Mechanisms.  Joint implementation
  • Climate Exchanges
  • Trading Carbon Emissions: forward curves
  • Correlations with fuels
  • Emissions swaps 



Todays Date:

Duration 2 days
Fee Available as an in-house tailored course

Investment Education PLC
45 Old Hall Road, Manchester M7 4JF, United Kingdom
Tel:+44 (0)161 832 3800
Registered in England Number 2129160
VAT Registered Number GB 480 2112 85

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