OTM provides a unique and comprehensive reference source to the structure and conduct of the international oil markets. The newly-updated manual covers all the major oil trading instruments and their applications; the trading centres, contracts, uses and users of both the physical and the terminal oil markets, and their administrative, management, tax, and accounting implications. It also includes vital information on the most recent changes to the international legal and regulatory structures.
The manual is divided into three complementary
parts;
Characteristics An introduction to oil and oil trading, and includes material on the nature of oil as a commodity, refinery processes and the different ways in which oil is priced.
Instruments and markets Deals with the oil market itself taking each segment in turn, explaining how the various trading instruments work and describing the markets that have evolved to trade them. It starts with the physical oil markets, moving on to forward and futures markets, followed by options and swaps.
Administration Covers the essential 'back-room' activities without which oil trading could not continue. It includes practical material on operations and logistics, credit control, accounting, taxation, contracts and regulation, and controlling financial risk, providing a unique guide to the subject.
Compiled from the contributions of a range of internationally respected professionals, it is the indispensable practical companion for all those involved with trading in this complex commodity.
About the editor
David Long is a Partner in Oxford Petroleum Research Associates (Opra) and specialises in the operation and development of oil and gas markets. He is a regular contributor to newsletters published by Petroleum Argus Ltd, and research reports published by the Centre for Global Energy Studies (CGES) in London. His interests include the development and application of new trading techniques in the oil and gas industries and he has been involved in the preparation of training material on swaps and options and development of computer software for analysing oil price behaviour. David began his career with BP in 1977, where he worked in Corporate Planning and Supply Departments. He spent two years on secondment at the Oxford Institute for Energy Studies, studying the development of forward paper markets in oil, before joining the institute as a Research Fellow from 1986 to 1989.
Contents
The trading of oil
David Long
- Why is oil traded
- Trading characteristics of oil
- Structure of the oil market
Physical characteristics and refining
Hugh Quick
- Introduction
- Uses of oil products
- Pricing
- Properties of oil products
- Crude oils
- Oil refining
- Environmental factors
- Measurement, sampling and testing
Oil pricing arrangements
Catherine Hamer
- Types of pricing mechanism
- Fixed prices
- Floating prices
- Applying pricing mechanisms
- Sources of price information
Crude oil markets
Petroleum Argus
- Introduction
- North Sea
- Mediterranean
- West Africa
- United States
- Middle East
- Asia Pacific
- Latin America
Product markets
Petroleum Argus
- Introduction
- Europe
- United States
- Asia
- Pacific
Forward and futures contracts
Sally Clubley and David Long
- Introduction
- What are forward and futures contracts?
- The pricing of forward and futures contracts
- How are forward and futures contracts used?
- Conclusions
Forward paper markets
David Long
- Introduction
- Structure and organisation
- Europe
- United States
- Arab Gulf and Far East
- Future developments
Oil futures exchanges
Sally Clubley
- Introduction
- The oil futures exchanges
- Delivery procedures
- Options on oil futures
- Clearing mechanisms
- Future developments
Options
David Knox
- Introduction
- What is an option?
- Using options
- Pricing options
Swaps
David Long
- Introduction
- What is a swap?
- Pricing swaps
- Using swaps
- Future developments
Long term oil markets
Frederic Barnaudand Philippe Lautard
- Introduction
- Market participants
- Market liquidity
- Trading instruments
- Pricing models
- Contractual issues
- Using long dated derivatives
- Conclusions
Operations and logistics
Robin Burley
- Introduction
- Scheduling
- Book-outs
- Nomination and documentation
- Inspection
- Demurrage
- Shipping operations
- Terminals, trans-shipments and storage
Credit control
Catherine Jago
- Why is credit control necessary?
- Assessing credit risk
- Limiting financial exposure
- Methods of credit monitoring
Accounting
Hanif Barma, Rachel Leigh and Matthew Price
- Introduction
- Accounting guidance
- General principles
- Futures contracts
- Forward contracts
- Swaps
- Options
- Physical hedges
- Disclosure requirements
- Conclusions
Taxation of oil trading
Phil Greatrex
- Introduction
- United Kingdom
- United States David Zimmerman and John S Levin
- Singapore Alain Ahkong
- United Kingdom taxation of trading instruments
- The UK PRT nomination scheme
Contracts
Denton Hall, Malcolm Groom and Diyar Kanashev
- Introduction
- General
- Express terms
- Implied terms
- Incorporated terms
Legal and regulatory issues
Blanche Sas, Malcolm Groom and Vince Mulvey
- Introduction
- International
- United States
- United Kingdom
- Singapore
Controlling financial risk
Francoise Deshusses
- Why risk control is important
- Characteristics of the energy market
- Valuation of trading positions
- Determination of risk
- Operations
- Conclusions
