Day 1 – Wednesday, May 16, 2012
8:00 – 8:30 a.m.
Registration/Continental Breakfast
8:30 – 9:00 a.m.
Introduction/Goals
Let's meet our instructors, meet the attendees and go over an outline of what you will learn.
9:00 – 9:45 a.m.
Risk Management 101
What is risk management? Why do we call it hedging? Why is everyone talking about it and why is it so crucial to your petroleum business? In this session, we'll discuss:
- The importance of a risk management plan as part of your overall fuel buying program.
- What is your risk? How do you identify it?
- The risk challenges that are unique to gasoline or diesel fuel marketers.
9:45 – 10:45 a.m.
Risk Management Tools: What is Available to You
Wading through the myriad of tools that are available to petroleum marketers can be an arduous, and confusing task. In this session, we'll break down:
- Futures markets – what they are, and why they are so important to a hedging program.
- Physical/forward markets – how they differ from futures markets.
- Unregulated (OTC) markets, and counterparties.
- Three critical steps that are crucial in setting up a risk management program.
10:45 – 11:15 a.m.
Refreshment Break
11:15 a.m. – 12:30 p.m.
Futures 101 Part One: Understanding the Futures Contract
Before you can do anything, you must understand futures contracts, and how they work. In this session, we will outline:
- The NYMEX: what it is, and why it's so important!
- Futures contracts 101: what is available to you?
- Who are the players that buy and/or sell futures contracts?
- How to answer the critical question of risk: am I a "long" hedger, or a "short" hedger, and what are the differences?
- A simple explanation of the cash flow of futures trading.
- The subtle nuances of futures orders.
12:30 – 1:30 p.m.
Networking Luncheon
1:30 – 1:45 p.m.
Quiz
Think you got it all? We'll make sure you do with a simple quiz that goes over what we've learned so far.
1:45 – 2:15 p.m.
Futures 101 Part Two: Futures Contracts In Action
Now that you understand what a futures contract is and why it's so important to implementing a risk management strategy, let's go to the next step:
- What a marked-to-the-market report is and how to read it.
- The money flow: we'll walk step-by-step through a futures transaction.
- Real world examples of how petroleum companies use basic futures contracts.
2:15 – 3:00 p.m.
Basis – Listening to the Market!
Before you can seriously implement a risk management program, you must understand basis, and how it affects your business. We'll go over in detail:
- Basis – what it is, and why it is so important that you understand it!
- What does basis tell me about my local supply and demand?
- How your local market interacts with the futures market.
- Basis history – how the past can make you a better buyer going forward.
- How different products, with individual product specs, move in relation to the NYMEX.
3:00 – 3:30 p.m.
Quiz/Review of Key Concepts
Just to make sure you didn't miss anything, we'll have another simple quiz that will go over the key concepts we learned today. This is also a great time to ask questions!