The futures for heating oil are contracts for delivery of 42,000 gallons – the amount of diesel fuel needed in any month is unlikely to equal 42,000 gallons or a multiple of that amount.…
Crude oil, petrol and diesel are different products and are bought and sold in their own markets. Each market is typically regionally-based and there are linkages and transactions between regional markets. Prices in regional markets reflect the supply and demand balance in each market and the physical characteristics and quality of each commodity. Prices in regional markets can be volatile and can move in different directions from each other. This can be due to the impact of factors and events unique to one market – such as supply and demand pressures in a region, hurricanes, wars and civil unrest. This is why focusing on relevant markets and longer term price trends is more important than daily or week-to-week price movements. Australia’s regional market for petroleum products is the Asia-Pacific market. Key crude oil pricing benchmarks for the Asia-Pacific market including Australia are Tapis, Dated Brent and Dubai – not West Texas Intermediate (the US market benchmark) widely reported in the media. The Singapore price of unleaded petrol (MOPS95 Petrol) is the key petrol pricing benchmark for Australia. To meet Australian fuel demand, around 15-20% of petrol is imported (mainly from Singapore). Singapore is the regional refining and distribution centre and among the world’s largest. If Australia’s petrol prices were below Singapore prices, Australian fuel suppliers would have no commercial incentive to import to Australia (because sales of that fuel would be at a loss here). In addition, Australian refiners would have an incentive to export production. ‘Refiner margins' are the differences between product prices and crude oil prices – both of which are set by the market, not by oil companies (e.g. a Singapore petrol ‘refiner margin’ = MOPS95 Petrol price minus the relevant crude oil price).…
As the good is not perishable oil companies do not need to sell it immediately and can therefore influence the flow of oil and also its price. Customers also have few substitutes so there is always a strong demand for the product. Furthermore individual buyer power is low as there are large amounts of customers who purchase low volumes. Demand is set to rise despite a weakening economy, which is shown by rising energy prices. The saving grace for customers is the low switching costs as products are undifferentiated and customers don’t have to sign a contract when they fill up there tank.…
Future contracts is a way to hedge against volatile price changes. MML will enter into a March future contracts to buy it at a lower price to reduce its risk. As for options, it is recommended for MML to use put options. The type of options that MML uses are American put options.…
* The trader sells two option contracts at the middle strike price and buys one option contract at a lower strike price and one option contract at a higher strike price. Both puts and calls can be used for a butterfly spread.…
As a result diesel has got cheaper to a greater extent than natural gas. Due to similar reasons, whenever the petroleum based fuel market will improve the liquid fuels are expected to get expensive at a faster rate than natural gas. And that improvement in fuel prices is just round the corner as the industry as a whole has decided to produce and explore for less and less of petroleum especially crude oil. Hence, we are going to see the gap between the prices of natural gas and diesel increase in the near future. Therefore, the users of medium and heavy duty vehicles especially fleet owners are going to prefer natural gas vehicles more and more for its sheer economy. And based on this we can say that being in the business of natural gas vehicles is going to be more profitable. So the prospects of natural gas vehicle market are…
22. The company should short five contracts. It has the risk that offsetting investments in the hedging strategy will not experience price changes in entirely opposite directions from each other, or basis risk. It is exposed to the difference between the October futures price and the spot price of light sweet crude at the time it closes out its position in September. It is also exposed to the difference between the spot prices of light sweet crude and the oil it produces.…
Abstract:It is almost two and a half years since the introduction of currency futures under the currency derivatives segment of Indian stock exchanges. The volumes have increased tremendously on NSE and its arch rival MCX-SX, the two dominant exchanges of trading in currency futures; while on BSE practically there have been no volumes in the last six months or so. Trading in currency futures had started by NSE on August 29, 2008. The purpose of this paper is to examine the rationale behind their introduction and to examine whether there is any impact of spot price on trading volume, value and volatility of daily settlement prices of currency future market.…
Europe Oil and Gas Industry Research Guide from Researcher is a comprehensive handbook on Europe oil and gas markets. The report analyzes in detail 29 markets in the region along their complete oil and gas value chain. Country wise forecasts of over 16 parameters including oil, gas, gasoline, diesel, LPG, fuel oil, LNG consumption and production in addition to GDP and Population forecasts are provided. Further, country wise details of exploration blocks, licensing rounds, refining capacity, coking, FCC, HCC capacity, liquefaction, regasification capacities and storage capacities along with planned cross-country pipelines are provided in detail. Further, complete details of over 180 refineries, 50+ LNG Terminals, 700+ storage terminals are provided. All potential investment opportunities in each country are also provided. Further, investment and operational SWOT Analysis is included for each country to analyze drivers and challenges of operating in a country. On the competitive landscape, oil and gas sub-segment wise leading players along with their market shares and equity weighted capacities/production are also provided. Further, business, SWOT and financial profiles of five leading players in the region including ENI SpA, BP Plc, Total SA, Rosneft and Exxon Mobil Corporation are provided in detail. The report also analyzes the impact of all major developments in each of the 29 Europe oil and gas markets.…
Portions of this book were previously published as Technical Analysis of the Futures Markets (New York Institute of Finance, 1985). Printed in the United States of America 10 9 8 7 6 This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. -From the Declaration of Principles ;ointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.…
References: Gold, G. (1975). Modern commodity futures trading (7th rev. ed.). New York: Commodity Research Bureau.…
1. Introduction to Derivatives 2. Market Index 3. Futures and Options 4. Trading, Clearing and Settlement 5. Regulatory Framework 6. Annexure I – Sample Questions 7. Annexure II – Options – Arithmetical Problems 8. Annexure III – Margins – Arithmetical Problems 9. Annexure IV – Futures – Arithmetical Problems 10. Annexure V – Answers to Sample Questions 11. Annexure VI – Answers to Options – Arithmetical Problems 12. Annexure VI I– Answers to Margins – Arithmetical Problems 13. Annexure VII – Answers to Futures – Arithmetical Problems 1 - 9 10 - 17 18 - 33 34 - 62 63 - 71 72 - 79 80 - 85 86 - 92 93 - 98 99 - 101 102 - 104 105 - 106 107 - 110…
The study is limited to “Derivatives” with special reference to Futures in the Indian context and India Info line has been taken as representative sample for the study.…
23 Allison Holland and Anne Fremault Vila, 1997; Features of a successful contract: Financial futures on LIFFE; Bank’s Markets and Trading Systems Division; 181-186…
Jarrow, R & Oldfield, G (1981) Forward contracts and futures contracts, Journal of Financial Economics, vol. 9, no. 4, pp. 373-382.…