Introduction to Petroleum Hedging
This primer provides a practical understanding of petroleum hedging and energy price risk management for those with limited or no knowledge of the subject. The focus is on CME Group’s NYMEX exchange-traded instruments and begins with a thorough understanding of the exchange itself. Futures contracts are defined and used in relevant industry examples and detailed case studies to learn the basics of energy price risk management. We will connect the dots between the financial aspects of the futures market and the physical market where product is consumed. This course simplifies and removes the mystery of what many consider to be an intimidating subject.
Topics in this course include:
- Hedging and risk management defined
- NYMEX market basics and functionality
- Futures contracts and expiration
- Defining risk and hedge objectives
- Forward month trading and curve influence
- Basis definition and calculation
- Forecasting and budgeting
- Hedge accounting