Oil Trading Manual - 1st Edition - ISBN: , View on ScienceDirect Price includes VAT/GST. DRM-free (EPub, PDF, Mobi). The Oil Trading Manual (OTM) provides a unique and comprehensive reference source to the latest developments in the structure and conduct of the. This comprehensively updated edition of Oil Trading Manual (OTM) covers all the major oil trading instruments and their applications; the trading centres, contracts, uses and users of both the physical and the terminal oil markets, and their administrative, management, tax, and.
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OIL TRADING MANUAL FREE PDF VZKYTZRZGI VZKYTZRZGI | PDF | 44 Pages | KB | OIL TRADING MANUAL FREE PDF PDF. PDF (Adobe DRM) The Oil Trading Manual (OTM) provides a unique and comprehensive reference source to the latest developments in the structure and. David Long-Oil Trading Manual_ A comprehensive guide to the oil markets- myolicotiball.ga
She is a faculty member of Invincible Energy, an international training and consultancy company, with whom she is involved in developing and presenting public courses and in-house seminars on all aspects of business risk in the oil, gas and electricity markets. She is the author of Trading in Oil Futures and Options. He is actively involved in the options market and specialises in developing new applications for OTC options and swaps.
He previously spent fifteen months on secondment to the Oxford Institute for Energy Studies, where he conducted research on oil economics, and to the London University City Business School, where he studied financial and commodity markets. Robin Burley Robin Burley is the founder of Kennet Oil Logistics, an independent consultancy engaged in advising companies on operational procedures and strategy.
Robin has extensive experience of the oil industry, including ten years with British Petroleum and ten years with Gulf Oil. During this time he held various management posts with repon- sibilities for supply economics, oil production joint ventures, supply, trading and operations, ship management, chartering and fleet planning, and logistics, storage and trans-shipment.
He has worked abroad in Europe, the US and the Middle East, and has been involved in negotiating supply and logistics arrangements worldwide. His work has included audit work, client training and advising clients on a range of due diligence, acquisition and privatisation assignments.
Hanif is also responsible for energy industry training at PricewaterhouseCoopers. Hanif joined Price Waterhouse in and has specialised in accounting aspects of the oil and gas industry since He qualified as Chartered Accountant in Sorry, this product is currently unavailable. Sorry, this product is currently out of stock.
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For example, CME introduced futures based on live animals in the s cattle and hogs , currency futures in the s, stock index and interest rate futures in the s and many new contracts in the s, including milk, butter and cheese futures. CME continues to add contracts: most recently, options and futures on real estate and weather.
Some CME Weather contracts are based on temperature differences from an average, some on the number of days frost occurs, and others on the amount of snowfall in a given location. Derivative products are also traded on economic announcements, such as economic growth and unemployment statistics.
Futures trading is a global industry, and CME futures can be traded electronically outside the United States in more than 80 countries and foreign territories through approximately direct connections to the CME Globex electronic trading platform.
Regulation Both the exchanges and the government play a role in regulating futures market activity. The rules set forth by the CBOT in and by the other developing exchanges across the country formalized the practice of futures trading, but by no means got rid of problems associated with this speculative activity.
In the years to follow there were situations of fraud and attempts to manipulate the market. As new problems arose, the commodity exchanges continued to refine the rules of behavior required of their members. Outwardly, few of the benefits of futures trading were apparent. It looked like feverish speculation, spectacular price fluctuations and trouble for farmers.
For 50 years from the s onward, bills were introduced in both state legislatures and the Federal Congress to abolish or tax futures trading out of existence, but did not pass. Opposition was highest during periods of low prices and lowest when prices rose. Over time, the importance of futures trading to the development of agriculture and trade gradually became apparent.
The Grain Futures Act of was the first federal law regulating futures trading. It allowed the government some control over the exchanges by requiring them to be licensed and to prevent price manipulation by their members. It also provided for a supply of continuous trading information. This Act was amended and became the Commodity Exchange Act CEA of It dealt with market abuses by traders and commission merchants as well as the exchange members.
Price manipulation became a criminal offense. More amendments were made over the years. Although the futures exchanges were essentially self-regulating, they had to obtain CFTC approval for any regulatory changes or for the introduction of new futures and Commodity Marketing contracts. They also had to have trading rules, contract terms and disciplinary procedures approved by the CFTC. Similarly, futures contracts that are more susceptible to market manipulation, like commodities, are traded on organized futures exchanges such as CME where the exchange and the CFTC can monitor activity.
Other sorts of contracts used primarily by big institutions, such as oil and metals, are regulated more lightly. Another purpose of the CFMA was to make it easier for exchanges to innovate and introduce new contracts. The Exchanges Today The exchanges provide the place and the rules under which trading takes place.
A futures exchange formulates rules for trading of futures contracts, provides a place to trade and supervises trading practices. Its members are people whose business is trading. There are nine futures exchanges in the United States as of January There are many different products traded at the nine futures exchanges. Although agricultural commodities were the only ones traded when the futures markets first began, today there is more emphasis on the financial and global markets.
Some futures exchanges have merged with stock exchanges such as the Philadelphia Board of Trade with the Philadelphia Stock Exchange, or PHLX to offer a range of financial assets and derivatives for trading.
There is also great interest in merging futures exchanges in different countries to increase cross-border trading opportunities. And the InterContinental Exchange ICE has no trading floor; it is an all-electronic futures exchange with its primary server located in Atlanta, Georgia.
It establishes the terms of the standardized contracts that are traded. It disseminates price and market information and provides the mechanics to guarantee contract settlement and delivery. Clearing firms are responsible for the day-to-day settlement of all customer accounts at futures exchanges.
They act as a third party to all trades, serving as downloader to every seller and seller to every downloader, and guarantor of all contracts. An Analogy The exchanges provide the playing field and equipment, write the rules, and act as referee, head linesman, and field judges, but do not handle the football.
They do not trade and neither win nor lose. Firms earn a commission on all transactions. Everyone who trades must have an account with a brokerage firm. Floor traders are members of an exchange.
They download and sell contracts on the floor of the exchange in open outcry and via electronic trading for some contracts. All trading is done publicly so each trader has a fair chance to download and sell. There are two types of traders on an exchange floor: Floor traders: People who trade for themselves or the accounts they control, using different trading strategies. Scalpers make a living by downloading and then quickly selling, or vice versa, at fractions of a cent profit.
Day traders download and sell contracts throughout the day, closing their position before the end of trading. Position traders, who take relatively large positions in the market, may hold their positions over a long period of time. E-traders: With the introduction of CME Globex and other electronic trading platforms, traders no longer need to be physically present on the floor.
CME Globex is linked to the CME open outcry floor system, so electronic trading can take place anywhere there is a CME Globex terminal and at any time, including after regular floor trading hours.
While electronic traders can choose to trade alone, others come together in small, off-floor areas called trading arcades, which gives electronic traders some of the interaction available on the floor and the chance to share the overhead expense of computers and information feeds.
Because these funds can make large trades, they can have a significant impact on individual futures markets and on price trends. Speculators try to make money by downloading and selling futures and options. They speculate that prices will change to their advantage. They do not intend to make or take delivery of the commodities. Speculators assume the risk in the market and provide liquidity. Hedgers are people or firms who use futures or options as a substitute for downloading and selling the actual commodity.
They download and sell contracts to offset the risk of changing prices in the cash markets. Hedgers use futures or options to transfer risk to speculators. What is the total value of the sale? What is the total price of the download?
How much will you receive for the sale? How much will you pay for the download?
What selling price do you need after two months to break even? The activity of trading standardized contracts for commodities to be delivered at a later date began in the U. Today, the futures market provides the opportunity for producers to lock in prices for their commodities and for speculators to trade for profit.
A futures contract is a standardized agreement to download or sell a commodity at a date in the future. The futures contract specifies: Commodity live cattle, feeder cattle, lean hogs, corn, soybeans, wheat, milk, and so on Quantity number of bushels of grain or pounds of livestock as well as the range of weight for individual animals Quality specific U.
The only aspect of a futures contract that is not specified is the price at which the commodity is to be bought or sold. The price varies; it is determined on the floor, or electronically, as traders download and sell the contracts. The prices they offer and bid reflect the supply and demand for the commodity as well as their expectations of whether the price will increase or decrease.
Seven months listed at a time on CME Globex. LTD p. Remember that the contract value varies as the price changes. Anyone can download or sell futures contracts through the proper channels. For example, you can sell a CME Live Cattle futures contract even if you do not have any cattle to deliver.
Although under the futures contract you are obligated to deliver, you can remove that obligation at any time before the delivery date by offsetting or downloading the same type of futures contract. Similarly, you could download a CME Live Cattle futures contract without the intention of taking delivery of the cattle. You remove the obligation to take delivery by offsetting or selling the same type of futures contract. They try to make money by downloading futures contracts at a low price and selling back at a higher price or by selling futures contracts at a high price and downloading back lower.
They take on the risk that prices may change to their disadvantage. As the delivery month of a contract approaches, the futures price tends to fall in line with the cash market price of the commodity.
Thus, most producers remove their obligation to deliver or take delivery on the futures contract just as speculators do. But producers will then sell or download actual commodities in the cash markets. Hedging with Futures Hedging is a risk-management tool for both producers and users of commodity products.
Hedging is downloading or selling futures contracts as protection against the risk of loss due to changing prices in the cash markets. Hedging is a risk-management tool for the producer. If you have a crop of livestock to market, you want to protect yourself against falling prices in the cash markets.
If you need to download feed or feeder cattle, you want to protect yourself against rising prices in the cash markets. Either way, hedging provides you with that protection.
The short hedge protects the seller of a commodity against falling prices. The long hedge, or downloading hedge, used when you plan to download a commodity.
The long hedge protects the downloader of a commodity against rising prices. Long and Short If you are long futures, you bought a futures contract. If you made a long hedge, you bought a futures contract to protect against price increase.
You plan to download the commodity. If you are short futures, you sold a futures contract. If you make a short hedge, you sold a futures contract to protect against price decrease. You plan to sell a commodity. The Short Hedge The short hedge protects a producer with a commodity to sell against falling prices. When you plan to sell a commodity, you can use a short hedge to lock in a price and protect against price decreases.
This flow chart shows the steps taken in a short hedge.