Energy markets play a key role in the economy, but the structure of these markets is complex and analysis of factors driving pricing and risk can be difficult for outsiders with limited knowledge of the physical operations involved in energy production. Taking this course will help you develop a deeper understanding of how these dynamic and important markets work and make you better prepared to take advantage of the opportunities they provide for trading on views of energy prices or volatility and hedging energy price risk.
By the end of the course, participants will be able to:
- Describe the physical processes associated with natural gas and with crude oil exploration, production and refining
- Identify factors affecting spot and forward prices for crude oil and natural gas
- Outline the ways in which physical crude oil and physical gas is traded
- Explain how financial contracts linked to crude oil, petroleum product markets and natural gas, including futures contracts, fixed-for-floating swaps, basis or differential swaps and synthetic storage, are used to express market views and hedge risks
- Define and explain key terms and concepts related to power generation
- Analyze the relationship between electricity prices and the costs of primary energy sources
- Describe the major changes in regulation that have influenced the development of North American electricity markets
- Identify factors affecting forward prices for electricity
- Describe and discuss applications of power swaps and other derivatives
- Participants should understand simple financial concepts such as present value and have a basic knowledge of derivative instruments (forwards, futures, options and swaps).
- No prior knowledge of energy markets is assumed.
Advance Preparation: None
Computers and Financial Calculators: N/A
Recommended CPE Credits: 7