By Simo M. Dafir, Vishnu N. Gajjala
A hands-on consultant to navigating the recent gasoline markets
Fuel Hedging and possibility administration: options for airways, Shippers and different shoppers provides a transparent and useful figuring out of commodity cost dynamics, key gasoline hedging strategies, and chance administration options for the company gas customer. It covers the commodity markets and spinoff tools in a way obtainable to company treasurers, monetary officials, possibility managers, commodity investors, structurers, in addition to quantitative execs dealing within the power markets.
The publication incorporates a large choice of key subject matters relating to commodities and derivatives markets, monetary chance research of commodity shoppers, hedge application layout and implementation, vanilla derivatives and unique hedging items. The publication is exclusive in delivering intuitive advice on knowing the dynamics of ahead curves and volatility time period constitution for commodities, gasoline derivatives valuation and counterparty probability thoughts reminiscent of CVA, DVA and FVA. absolutely up to date and suitable, this ebook contains accomplished case reports that illustrate the hedging method from belief to execution and tracking of hedges in different situations.
This useful consultant may also help the reader:
- Gain professional perception into all facets of gas hedging, rate and volatility drivers and dynamics.
- Develop a framework for monetary threat research and hedge programs.
- Navigate risky power markets by means of utilising powerful possibility administration techniques.
- Manage undesirable dangers linked to commodity derivatives by way of knowing liquidity and credits threat calculations, publicity optimization ideas, credits fees comparable to CVA, DVA, FVA, etc.
Praise for Fuel Hedging and chance Management
"Risk administration is an artwork, now not a technological know-how, however it definitely is helping to understand loads of technological know-how. during this booklet, the authors supply an exceptional evaluate of either qualitative and quantitative features of chance administration and the way to layout and implement powerful win-win gas oil hedging techniques that may in attaining the specified pursuits lower than common and severe marketplace conditions.
In addition to discussing key foundational concerns, the e-book additionally discusses a framework to appreciate and deal with highly very important second-order results, resembling credits probability or margin calls or asset-liability mismatches, that have the capability to show a good suggestion right into a undesirable outcome.
A needs to learn for somebody within the finance division of a company, exchange residence, or monetary enterprise focused on gas oil hedging."
—Diego Parrilla, Former worldwide Head of Commodity recommendations and Head of Commodities, financial institution of America
"This booklet offers hugely priceless insights into hedging and hazard administration methodologies, in addition to concept, for the clients of strength items. Dafir presents instinct stemming from not only top-tier commodity structuring services, but in addition broader perception from his previous adventure as a credits derivatives and exotics trader."
—Mitch Matharu, former Head of Structuring, Merrill Lynch
"An Absolute needs to learn. From the basics of oil markets to the foremost issues in negotiating a credits contract and minimizing hedging bills, passing via the subtleties of implied volatility floor development and its implications in derivatives pricing, this e-book will give you the quintessential practitioner's toolbox, worthy even if you're a amateur or a professional gasoline trader."
—Frederic Cogny, worldwide Head of Commodities dependent items buying and selling, regular Chartered Bank
"In this ebook, Dafir blends his deep wisdom of the commodity markets and the vagaries of the monetary marketplace along with his excellent mathematical skill to discover gasoline hedging in a way available to gas Procurement Departments, CFOs and board members."
—Mark Long, Former Head and coping with Director of Merrill Lynch Commodities Asia
". . . This booklet is a hands-on advisor for an individual drawn to "Fuel Hedging and probability Management", together with legal professionals considering the execution of commodities hedging transactions and similar ISDA and CSA negotiations."
—Justin Boyd, Former Head of monetary Markets criminal, common Chartered Bank
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Extra resources for Fuel hedging and risk management : strategies for airlines, shippers and other consumers
These impurities need to be removed before natural gas can be transported. Natural gas is transported through pipelines or is liquefied to transport using liquefied natural gas (LNG) carriers. In this case, regasification facilities are required at the terminal where LNG is transported to. Since the heating use of natural gas is seasonal, gas needs to be stored for the winter season. Natural gas is “injected” into underground facilities like depleted gas reservoirs, salt caverns, and aquifers or stored within pipelines or as LNG.
Natural gas, when produced along with crude oil, is called associated gas. When crude oil is found in small quantities along with primarily natural gas, it is called condensate. Natural gas can also be extracted from coal reservoirs (known as coalbed methane), and landfill gas and biogas also contain high quantities of methane. Natural gas usually occurs with impurities such as water vapor, carbon dioxide, mercury, nitrogen, and hydrogen sulfide, as well as other gases such as ethane, propane, butane, and heavier hydrocarbons, which when liquefied are called natural gas liquids (NGLs).
OPEC accounts for over 81% of the world’s crude oil reserves as of 2012, and produces about a third of global production, thereby wielding significant influence over oil prices. Refining Prices of crude oil are also affected by their usability in refineries and refining capacity. As refineries are large installations, which are constructed over a long period of time, refining capacity is finite and inelastic and refineries are typically configured to handle a specific type of crude oil. Thus, price trends for crude oil will be affected by the refining capacity available to process that particular blend of oil.