Global Crude Oil Markets: Trade, Pricing & Geopolitics

*CONDUCTED OVER TWO HALF-DAY SESSIONS
3:00PM TO 6.30 PM, Singapore Time

Location: Virtual

Venue: N.A.

Starts: 16 Aug 2021

Ends: 17 Aug 2021

Type: Virtual

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This 2-day course is focused on trade and pricing in global crude oil markets. To understand patterns of international crude oil trade and pricing, the course covers how to value different crude oil types and how they compete in price and quality across markets. Key economic and valuation techniques are covered. Crude oil trade and pricing is set in a larger geopolitical context which will also be covered. The course covers in detail the Middle East – Asia crude oil trade relationship, which concerns the world’s largest and most important single trade flow of crude oil.

Course Objectives

This-2-day course will focus on the pricing of Middle East crude oil in Asia, analysing:-

  • How different crude oil types are valued using refinery models
  • How Middle East national oil companies set their official prices for Asian Markets
  • How Asian crude oil markets work, exploring the role of quality, timing and location in determining crude oil competitive values

Course Methodology

The course will be taught via a video conferencing platform, over six modules of either 1 or 1.5 hours each. The course instructor will adopt an interactive approach which will encourage active participation and delegate engagement.

Course Director

Course Outline

+ Day 1: 16 August 2021

Module 1: 3.00PM TO 4.00PM SGT

Introduction

  • Global supply and demand of crude oil
  • Global Flows of Crude Oil Trade
  • Disposition of crude oil by end refined
    product

Module 2: 4.20PM TO 5.20PM SGT

Buying and Selling Crude Oil and Refined Products

  • Physical market v. futures markets
    • Role of Hedgers and Speculators; Swaps markets
  • Spot contracts and term contracts
    • Portfolio and risk profile for crude oil buyers
  • Contract basis (CIF, C&F, CFR, FOB)
    • Legal definitions; distribution of risk between buyers and sellers

Module 3: 5.40PM TO 6.30PM SGT

Economic Fundamentals of Pricing (demand and supply sides)

  • Microeconomics and Price Theory
    • Supply and Demand Schedules; Marginal Pricing; Willingness to Pay and Accept
  • Concept of Gross Product Worth (GPW)
    • Concept of Derived Demand; Joint Production of Various Products
  • Netback Pricing Analysis: Competition in the Crude Oil Market Across Regions
    • Quality, Location and Time attributes of pricing

+ Day 2: 17 August 2021

Module 4: 3:00pm to 3:40pm

Formulae Prices for Term Contracts vs. Spot Market Pricing

  • Pricing Formulaes and Official Selling Prices (OSPs)
    • Why price formulaes for OSPs emerged
  • Role of Price Reporting Agencies (PRAs) on Crude Oil and Refined Product Pricing
    • Platts “market on close” methodology; Argus weighted average prices
  • New Developments in Middle East Crude Oil markets
    • ADNOC Murban Futures Contract; Shanghai Sour Crude Futures Contract
  • Role of Dubai/Fujairah and Singapore in East of Suez crude oil markets
    • Singapore/Straits FOB prices as leading indicators for pricing

Module 5: 4:00pm to 5:30pm

Pricing of Middle East crude oil and geopolitics

  • Evolving OPEC and OPEC+ Roles in Crude Oil Markets
    • Historical evolution of pricing in the Middle East; From Seven Sisters to OPEC
  • Intra-OPEC competition and geopolitics
    • Roles of Saudi, Iran, Venezuela, etc
  • Middle East, Russia and US: International Geopolitics of Oil
    • US shale oil and gas as great disruptor in global markets

Module 6: 5:50pm to 6:50pm

In-depth look at price formula calculations

  • How OSP “offsets” are calculated
    • How National Oil Companies (NOCs) set premiums or discounts in formula prices
  • Comparing different formulaes
    • Differences among NOCs such as West African and Latin American NOCs (NNPC, PEMEX, etc) and Middle East NOCs

Key Issues & Trends To Be Covered

  • Oil market fundamentals and what drives supply, demand, and price movements
  • Models for the valuation of crude oil & factors causing the relative values of crude to change
  • Dynamic relationship of crude oil & petroleum product prices in physical and futures markets
  • How National Oil Companies set formula price for crude oil
  • Netback pricing analysis: An important benchmark to measure profitability & efficiency
  • Methodologies in oil price reporting
  • The role of OPEC & OPEC+ in crude oil markets
  • Intra-OPEC competition and geopolitics
  • International geopolitics of oil: Middle East, Russia and US

Who Should Attend

  • Crude & Refined Product Traders
  • Pricing & Risk Managers
  • Planning & Economic Managers
  • Corporate & Strategic Planning Managers
  • Commercial Managers
  • Channel Optimization Managers
  • Procurement & Purchasing Managers
  • Finance & Revenue Managers
  • Analysts – Market, Credit, Business, Trading & Commercial

 

 

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