Hedging & Management of Energy Price Risk

Finance & Investment

Next Intake: 13 Nov 2024 (Wed)

Intermediate
SkillsFuture
Short Courses

This module is conducted in-person.

Next course starts on

13 Nov 2024 (Wed) See Full Schedule

Fee

SGD2,943* (as low as SGD342.90 after maximum funding) Learn More

Duration

3 days
Weekdays (9am - 5pm)

Level

Intermediate

Who Should Attend

This workshop is highly recommended for professionals that are engaged in marketing, trading, financing and risk management of energy trading:

Energy traders keen to learn about risk management and hedging of energy prices
Corporate treasurers, finance directors in energy trading
Relationship managers, corporate bankers who advise energy trading companies
Trade finance specialists involved in the financing of oil trade
Professionals in the middle and back office of banks and corporations, in functions such as credit, risk, audit and operations, who are responsible for risk management of energy trades

Overview

Managing Oil Price Volatility

In the wake of 2020’s violent, historic oil price plunge and the ensuing period of hyper volatility and disruption, market participants and investors face even greater potential losses. What happens when oil prices go negative? How are risks assessed and managed? Given the complexity of energy supply chains and derivatives, professionals involved in physical trading, operations, and financing must access and process key market data and intelligence to optimally manage risk exposures and ensure cash flow and profitability.

This intensive 3-day workshop provides battle-tested, practical approaches to identifying, managing and hedging energy prices risks in real life situations. Participants will analyse various cases involving producers, refiners, consumers and traders and also engage in interactive team-based negotiations and simulations to gain hands-on experience.

Learning Objectives

Understand market dynamics and the interplay between physical and paper trading
Evaluate different hedging tools for price protection and scenario optimisation
Distinguish between various types of price risk management and hedging strategies
Develop keener senses of risk management constraints and pitfalls in contracts and trading
Gain market insights through case studies, negotiation and simulations exercises

Topic/Structure

Oil Markets, Supply Chains and Risk Management

Risk management: art or science?
Behaviours & biases
VULCAN effects
Market structure & price discovery

What is Hedging?

Dual Dimensions: protection & opportunity
Hedging in oil supply chains
- Producers: sell side hedging
- Refiners: margin hedging
- Consumers: buy side hedging
- Bankers, traders, funds: liquidity providers

Oil Prices, Benchmarks & Hedging

Spot markets & price benchmarks
Price reporting agencies (PRAs) & methodologies
Trouble with the curve & forward values
Flat price, spreads & basis risk

Oil Price Hedging Tools

Futures, forward, swaps & options
BFOET & Market on Close (MOC) window
Hedging with EFP, EFS, CFD and DFL
Suboptimal fits: constraints and variables
Deploying the Hedging Checklist

Arbitrage and Optimisation

Hedging in contango markets
Contango carry and time arbitrage
Location and space arbitrage
Cost factors: The 4D’s and the 5I’s

Paper vs Physical Contracts

Counterparty, trade finance and performance risk
Futures, OTC swaps and trade clearing
Plugging the gaps in physical contracts
Physical and paper trading pitfalls
Famous Risk Bust-ups and Rogue Traders

Market on Close (MOC) Window

Real time trading, pricing & hedging
Calculations MOPS values and strips
Backwardation, trader distortion and squeezes
Reconstructed MOC Window trading

Trends & Outlook

Monitor, Measure and Manage: internal control and reporting
Technology: digitisation of trading and risk management
Risk Tracking: MTM, VaR, stress and back testing
CTRM platforms and solutions
Impacts of regulation & government oversight: banks, PRAs

Assessment

As part of the requirement for SkillsFuture Singapore, there will be an assessment conducted at the end of the course. The mode of assessment, which is up to the trainer’s discretion, may be an online quiz, a presentation or based on classroom exercises.

Participants are required to attain a minimum of 75% attendance and pass the associated assessment in order to receive a digital Certificate of Completion issued by Singapore Management University.

Calculate Programme Fee

Fee Table

COMPANY-SPONSORED

PARTICIPANT PROFILE

SELF-SPONSORED

SME

NON-SME

Singapore Citizen < 40 years old

Permanent Resident

LTVP+

$882.90

(After SSG Funding 70%)

$342.90

(After SSG Funding 70%
+ ETSS Funding 20%)

$882.90

(After SSG Funding 70%)

Singapore Citizen ≥ 40 years old

$342.90

(After SSG Funding 70%
+ MCES Funding 20%)

$342.90

(After SSG Funding 70%
+ ETSS Funding 20%)

$342.90

(After SSG Funding 70%
+ MCES Funding 20%)

International Participant

$2,943

(No Funding)

$2,943

(No Funding)

$2,943

(No Funding)

All prices include 9% GST

Post Secondary Education Account (PSEA)
PSEA can be utilised for subsidised programmes eligible for SkillsFuture Credit support. Click here to find out more.

Self Sponsored

SkillsFuture Credit: Singapore Citizens aged 25 and above may use their SkillsFuture Credits to pay for the course fees. The credits may be used on top of existing course fee funding.

This is only applicable to self-sponsored participants. Application to utilise SkillsFuture Credits can be submitted when making payment for the course via the SMU Academy TMS Portal, and can only be made within 60 days of course start date.

Please click here for more information on the SkillsFuture Credit. For help in submitting an SFC claim, you may wish to refer to our step-by-step guide on claiming SkillsFuture Credits (Individual).
Workfare Skills Support Scheme: From 1 July 2023, the Workfare Skills Support (WSS) scheme has been enhanced. Please click here for more details.

Company Sponsored

Enhanced Training Support for SMEs (ETSS)

Organisation must be registered or incorporated in Singapore
Employment size of not more than 200 or with annual sales turnover of not more than $100 million
Trainees must be hired in accordance with the Employment Act and fully sponsored by their employers for the course
Trainees must be Singapore Citizens or Singapore Permanent Residents
Trainees must not be a full-time national serviceman
Trainees will be able to enjoy ETSS funding only if the company's SME's status has been approved. To verify your SME's status, please click here.

Please click here for more information on ETSS.

Absentee Payroll