Trading Refined Oil Products: The Consilience Guide
Trading Refined Oil Products: the Consilience Guide” is a companion volume to “Trading Crude Oil: the Consilience Guide”. Experienced crude traders know that to understand the value of the different types of crude oil that are produced around the world, they need to understand the shifting market for the products that can be manufactured from crude oil in the refining and blending processes.
Experienced refined products traders think the crude guys have it easy. Crude traders more or less sell whatever comes out of the ground: the refined product traders know that to make a margin they have to meet strict product specifications that change with the seasons and with tightening environmental legislation.
As for hedging, the crude traders complain about basis risk, which means they often have to hedge a cargo of “apples” with a financial instrument based on “oranges”. The products traders often have to hedge their “apples” with a financial instrument based on “artichokes”.
This book explains the refining process, the regional markets for each of the main refined product groups and the speciality products that get traded worldwide, the meaning of the quality specifications, the transport of products and the establishment and risk management of refined oil product prices