Risk management has changed the structure of oil prices forever
Refiners & marketers (R&Ms) are discovering the enhanced internal capital control that successful risk management strategies can bring to their operations. Through the use of sophisticated data collection and analyses, coupled with powerful predictive trading models, R&Ms can better manage the volatility of global commodities markets to their competitive advantage. This article dissects the factors affecting the trading on world markets for the refiner and offers suggestions on ways to mitigate risk. Risk management and the use of derivatives worldwide are under intense scrutiny. Recent media coverage of rogue trading and highly leveraged losses by some major industry players are offset by new capabilities in financial markets. These markets, with their new array of pricing options for refiners, marketers and customers, have created opportunities that are unparalleled in history. The causes and implications of volatility on market pricing must be carefully examined to ensure the viability of hedging strategies, and the inherent dangers in using and misusing risk management instruments must be weighed carefully.
- OSTI ID:
- 457901
- Journal Information:
- Fuel Technology amp Management, Journal Name: Fuel Technology amp Management Journal Issue: 3 Vol. 6; ISSN FTMAFH; ISSN 1087-4003
- Country of Publication:
- United States
- Language:
- English
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