Flat and Spread Training
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A large refinery in the region has been unexpectedly shutdown. What impact would this event have on calendar spreads along the gasoil forward curve?
Oil Trader buys crude oil at Urals June average and sells at Urals July average + 0.50 USD/bbl. Urals differentials to Dated Brent trade at:
June (-3.00) usd/bbl
July (-2.00) usd/bbl
What would the economic outcome of this trade be if you hedged it?
When you buy June/Dec calendar spread at 0 (flat) you worst case scenario is:
Which of the following would best describe storage play strategy?
According to the market rumours there is a large airline trying to hedge its next year fuel costs in the market. How would you expect this transaction affect the market term structure?
Oil Trader is looking to sell a fuel oil swap for next month. Current price indication is at 605/607 USD/mT. At a certain point of time the Trader sees Brent futures come off 1 USD/BBL. Using 6.35 bbls/mT conversion rate, at what price should the Trader expect to complete his trade?
Current market indication from your broker are as follows:
Dtd Brent Swap, USD/BBL 110.50/110.60
GO Crack Spread, USD/BBL 19.30/19.40
Jet Differential, USD/mT 54/56
Using conversion coefficient of 7.45 BBL/mT, at what price would you expect to buy a Jet swap?
You have just learned that unionized workers of a major European airline have gone on strike. Which of the following instruments would you expect to be the most sensitive to such news?
You have just learned that there is an unexpected shut down of a coking unit at the large refinery in your market? Which of the following trading strategies would reflect such market news?
On January 15, current market indications from your broker are as follows:
Dtd Brent Swap, USD/BBL:
Naphtha Crack Spread, USD/BBL:
Due to down cycle in the petrochemical industry you predict oversupply of Naphtha in the local market. Using conversion coefficient of 8.9 BBL/mT, which position would reflect your market view if you decided to trade at the current market prices?