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Forecasting the Prices of Crude-Oil, Natural-Gas and Refined Products - PHASE 1

An Interactive 5-Day Training Course

Forecasting the Prices of Crude-Oil, Natural-Gas and Refined Products - PHASE 1

NASBA

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Course Summary

This 5-day PHASE 1 GLOMACS Training Seminar is concerned with one of the most important activities in the development of oil and gas business-forecasting the oil prices, as basis for planning and investment. As we have learned that oil prices are depending on many factors, and that prices simulations need to be much more stringent in order to determine the actual risk that our investment is facing.

A critical component of decision-making in the energy industry deals with the aspect of “Whither oil prices?”:  Where do we expect prices to move in the near- and distant-terms? Participants in the Energy Industry are constantly confronted with a wide range of information regarding current and prospective prices in their industry.  Broadly, this data comes from analyses of supply-and-demand changes, geopolitical events and the financial markets, including the commodity markets.

The oil projects require lot of investment, and it takes years for the oilfield to start producing profit, therefore adequate forecasts are essential for companies to understand when and how their returns on investment will appear and how valuable will they be.

While providing the requisite background on the economics of financial commodity markets, as well as the statistical tools required to understand them, this GLOMACS Training Seminar demonstrates how the financial and commodity markets provide useful information for the generation of “expected prices”, or forecast prices, in the critical areas of oil, natural-gas and refined products. In so doing, this GLOMACS training course will also demonstrate the important distinction between valuation and risk / return analyses.

This GLOMACS training seminar course will develop an understanding of pricing, risk management, asset valuation and derivatives within the energy markets:

  • Learn to use financial models to analyze and forecast energy prices, extrapolate forward prices beyond the liquidity tenor
  • Understand the risk of and return from futures and options contracts on energy commodities
  • Manage and optimize your organization’s energy risk exposure
  • Learn to estimate and calculate volatility in energy prices
  • Utilize real options theory to value energy assets, use information from futures / option prices to make optimal production decisions: Optimal timing for extraction, optimal rate at which to extract oil (gas) from a field, value oil fields, pipelines and storage facilities, power plants
Course Outline
Day 1

Phase 1 is concerned with the basics of equity and commodity markets, using excel as a tool for modeling the pricing forecast, as well as the calculations of Interest Rates, Contracts and Option pricing. 

Day 2

The Current State of the Equity and Commodity Markets

  • Measuring Nervousness / Uncertainty of Equity and Commodity Markets
  • The Crude-Oil Markets: The Paradox of World Crude Oil Prices
  • Complexity and Interdependence in the Oil Market
  • Upstream Petroleum Fiscal Valuation and Modelling
  • The Refining Spread and Retail Gasoline Prices
  • Refined oil products-refining capacity and throughput
  • Natural  gas
    • Physical Characteristics and Supply
    • Reserves and Production
    • Demand Determinants
    • Trade
    • Pricing
Day 3

A Primer on the Interest-Rate Markets

  • Time and Time Value of Money-Modeling Commercial Behavior with the Economic Limit Test
  • The Brent Contract and IPE Brent Market
  • Financial Markets’ Message from Markets: Interpret Bond-market Moves in Conjunction with those in Equity Markets
  • Floating Rate Securities
  • Understanding the Fundamentals of Bond Valuation and Excel Functions for Bond Pricing
  • Bond risks, Interest-Rate Volatility and Interest Rate Risk as the Key Bond Risk
  • Duration and Convexity: Hedging Interest Rate Exposure
  • Forecasting Future Interest Rates Using
    • A financial-economics Approach
    • Practitioners' Approaches
Day 4

Overview of Statistical Concepts, Forwards and Futures

  • Basic Statistical Concepts: Average and Volatility, Stationarity of Time Variables
  • Regression Analysis
  • Using Solver to Solve Constrained Optimization Problems
  • Amortization and Depreciation
  • Fundamentals of Forwards and Futures Contracts: Definition, Payoff Diagram, Pricing by Arbitrage
  • Forward / Futures Prices and Forecast Prices
Day 5

Swap Contracts and Options in Energy Markets

  • Commodity Swaps
  • Payoffs and Put-Call Parity
  • Black-Scholes Formula
  • Option Sensitivities (the “Greeks”): Delta and Gamma
  • The Binomial Model and the Valuation of American-Style Options
Day 6

Forecasting the Prices of Oil, Natural-Gas and Refined Products

  • The Market Price of Risk: Estimating a Risk Premium in Finance, and Applying it to Energy Prices
  • How Can Use Regression Analysis to Fortify Our Understanding of Financial Markets’ Perspective on Forecast Prices?
  • Where Can We Observe Forecast Prices?
  • What is the Difference between Futures Prices and Forecast Prices?
  • What is the Capital Asset Pricing Model (CAPM) and How Can We Use it to Forecast Oil Prices?
  • Applying a Jump-Diffusion Model to Oil Futures Options
  • Using the Market Price of Risk to Implement Risk-Management from a Corporate Perspective
Certificates
  • Upon successful completion of the classroom-based training course, GLOMACS Certificate will be awarded to the delegates. Continuing Professional Education credits (CPE): In accordance with the standards of the National Registry of CPE Sponsors, one CPE credit is granted per 50 minutes of attendance
  • Upon successful completion of the online training course, a GLOMACS Certificate will be awarded to all delegates. Guided Learning Hours – In accordance with ISO 9001:2015–certified quality management standards, one Guided Learning Hour is awarded for every 60 minutes of attendance.
Providers and Associations

Endorsed Education Provider

NASBA

In Association With

Options & Brochure
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NASBA

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