Asset-Backed Trading & Hedging for Oil, Gas, Power, & LNG (CLASSROOM) - ABT
Course Schedule
| Date |
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*Prices do not include VAT, GST, or any other local taxes. All applicable taxes will be added to the invoice.
**Please register by the deadline to help us ensure sufficient attendance and avoid postponing the course.
Course Summary
This course is designed for commodity traders and related professionals seeking to enhance their practical knowledge of valuation, hedging, and risk management for long-term contracts and physical assets in dynamic energy markets. Through practical case studies and discussions, delegates will explore the strategies used by leading energy trading organizations to optimize assets and manage risk. The focus is on the application of these concepts from a practitioner’s perspective, without delving into the intricacies of quantitative model development.
The course will cover embedded optionality and trading strategies for optimizing storage, transportation (ground and marine), and long-term contracts across gas, power, and oil markets. Cross-commodity spread strategies will be examined in the context of power generation and oil refinery operations. We will also explore the valuation, hedging, and optimization of natural gas, LNG, and refined product storage strategies in various market conditions.
Who Should Attend?
- Asset-based traders
- Commercial analytics teams
- Market risk managers
- Structured product teams
- Fundamental analysts
- Middle office personnel
- Risk and audit committee members
- CFOs and treasury managers
- Finance department personnel
- Compliance managers
- Middle and back-office personnel
Course Content
Overview of Option Concepts
This module provides an overview of option concepts that will be discussed throughout the course in the context of asset backed trading strategies.
- Main types of options: Calls, Puts, Combinations
- Key clauses in an option contract.
- Why are options non-linear instruments: Understanding option payoffs
- Option Value Drivers: Intrinsic and extrinsic value
- Option Valuation – Closed-Form (Black-76) vs. Simulation Models
- Implied volatility and call-put skews
- Option Greeks: Delta, Gamma, Vega, Theta
Asset-Backed Trading and Real Options
This module introduces the core concepts of valuing and hedging physical assets and long-term contracts as real options.
- Understanding the various types of real options
- Commodity trading fundamentals in terms of transformation (time, space, form)
- Distinguishing real options from standard financial options
- Identifying intrinsic and extrinsic value components
- Applying optimization and re-optimization strategies
- Learning practical position management and monetization techniques
- Mapping the risk of real options to equivalent financial positions
- Case study: Destination optionality and exposure tracking in LNG trading
Understanding Energy Price Dynamics for Trading Decisions
This module provides a practical overview of energy price behavior and forward curve dynamics, essential for informing trading decisions.
- Analyzing forward curve behavior in energy markets
- Forward curves and market structure: Understanding market signals and designing asset optimization strategies.
- Case Study: Petroleum, Gas and LNG spot and forward market behavior during Iran War (March 2026)
- Linkage between Physical vs. Financial Markets in Oil Markets
- Case study: Brent and Dubai physical basis in 2026 and implications
- Gaining an overview of stochastic spot price model concepts and their influence in supporting trading and risk management decisions
- Understanding multi-factor and multi-commodity insights for integrated trading
- Applying practical insights from price dynamics to trading and hedging strategies
Transportation and Location Arbitrage Strategies
This module focuses on the "transformation in space" aspect of commodity trading, exploring strategies related to transportation and locational differences.
- Understanding pipeline and transportation options
- Differentiating between various capacity services
- Analyzing locational basis relationships in energy markets
- Applying basis swaps for price fixing and hedging transportation risk
- Case study: Natural gas locational basis trading
- Case study: The Brent Pricing Complex and asset-backed strategies to manage price and basis exposures
- Executing cargo arbitrage with practical considerations. Use of Futures and Basis Swaps
- Understanding Financial Transmission Rights (FTRs) and Congestion Revenue Rights (CRRs)
Storage Optimization and Hedging
This module delves into the "transformation in time" aspect, focusing on the valuation, optimization, and hedging of storage assets.
- Optimizing storage utilization in different market conditions
- Exploring specific natural gas storage time spread and trading strategies
- Implementing practical hedging strategies for storage assets
- Calculating the intrinsic value of storage
- Case study: Storage hedging and operational risk
- Understanding the extrinsic value of storage and spread options
- Case study: Floating Storage Play by VLCC Tankers blocked from entering Strait of Hormuz in March/April 2026
- Battery Storage: Energy arbitrage and Revenue Stacking Opportunities
- Case study: Optimization of Battery Storage Assets in Day-ahead and Reat Time markets
Transformation in Form: Blending and Processing Assets
This module explores the "transformation in form" aspect of commodity trading, covering optionality embedded in processing and blending operations.
- Identifying optionality in production processes
- Valuing power generation assets and understanding spark/heat rate spreads
- Case study: Optimization of Storage assets linked to Power Plants and Refineries vs. Merchant Storage Assets
- Refineries as real options: Refined products and crack spreads
- Hedging and speculation with crack spreads
- Optimization of refinery operations
- Case study: Refinery Feedstock Switching (Secondary Units) to optimize crack spread capture during March/April 2026.
- Understanding the complete LNG value chain transformation
- LNG Optionality: Diversion Options, Timing Options
- Regas Capacity and LNG Optionality in Europe
- Case Study: LNG Regasification Slots and Secondary Trading during Iran War
Risk Management for Physical Assets
This module focuses on the critical aspects of market, credit, and operational risk policies and metrics specifically for physical assets in energy trading.
- Establishing effective risk governance and limits
- Developing robust market risk and hedge policies
- Applying asset-specific market risk metrics like VaR and flow 'at-risk' measures
- Case study: Glencore’s changes in market risk limits in 2022-2024
- Analyzing a case study on gross earnings at risk for a power plant
- Effective Stress Tests and Scenario Analysis for Asset-Backed Strategies
- Measuring and managing credit risk and potential future exposures
- Identifying and mitigating operational risk in physical assets
- Managing volumetric risk and its relationship with operational risk
- Case study: Cargo Swaps on Stranded Qatari equity volumes in March/April 2026
- Addressing challenges when hedging physical exposures with financial forwards
