By Simo M. Dafir, Vishnu N. Gajjala
A hands-on consultant to navigating the recent gasoline markets
Fuel Hedging and danger administration: ideas for airways, Shippers and different shoppers provides a transparent and useful realizing of commodity expense dynamics, key gasoline hedging ideas, and possibility administration recommendations for the company gas buyer. It covers the commodity markets and spinoff tools in a fashion available to company treasurers, monetary officials, threat managers, commodity investors, structurers, in addition to quantitative pros dealing within the power markets.
The ebook features a wide array of key issues relating to commodities and derivatives markets, monetary chance research of commodity shoppers, hedge software layout and implementation, vanilla derivatives and unique hedging items. The booklet is exclusive in supplying intuitive suggestions on realizing the dynamics of ahead curves and volatility time period constitution for commodities, gasoline derivatives valuation and counterparty possibility recommendations similar to CVA, DVA and FVA. absolutely updated and appropriate, this e-book contains finished case experiences that illustrate the hedging strategy from perception to execution and tracking of hedges in assorted situations.
This useful consultant may help the reader:
- Gain specialist perception into all points of gas hedging, expense and volatility drivers and dynamics.
- Develop a framework for monetary possibility research and hedge programs.
- Navigate risky strength markets through utilizing powerful possibility administration techniques.
- Manage undesirable dangers linked to commodity derivatives through knowing liquidity and credits hazard calculations, publicity optimization innovations, credits fees comparable to CVA, DVA, FVA, etc.
Praise for Fuel Hedging and threat Management
"Risk administration is an artwork, no longer a technology, however it definitely is helping to grasp loads of technological know-how. during this publication, the authors offer an exceptional evaluation of either qualitative and quantitative features of probability administration and the way to layout and implement potent win-win gasoline oil hedging ideas that might in attaining the specified ambitions below common and severe industry conditions.
In addition to discussing key foundational matters, the e-book additionally discusses a framework to appreciate and deal with highly very important second-order results, resembling credits threat 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, alternate condominium, or monetary company fascinated by gasoline oil hedging."
—Diego Parrilla, Former worldwide Head of Commodity strategies and Head of Commodities, financial institution of America
"This e-book offers hugely worthwhile insights into hedging and chance administration methodologies, in addition to concept, for the clients of power 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 main issues in negotiating a credits contract and minimizing hedging expenditures, passing by means of the subtleties of implied volatility floor building and its implications in derivatives pricing, this booklet provides you with the critical practitioner's toolbox, priceless no matter if you're a amateur or a pro gasoline trader."
—Frederic Cogny, worldwide Head of Commodities dependent items buying and selling, common Chartered Bank
"In this e-book, Dafir blends his deep wisdom of the commodity markets and the vagaries of the monetary marketplace along with his very good mathematical skill to discover gas 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 ebook is a hands-on consultant for an individual drawn to "Fuel Hedging and chance Management", together with legal professionals keen on the execution of commodities hedging transactions and comparable ISDA and CSA negotiations."
—Justin Boyd, Former Head of economic Markets felony, general Chartered Bank
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Extra info for Fuel Hedging and Risk Management: Strategies for Airlines, Shippers and Other Consumers
The USA has a strategic petroleum reserve (SPR), which can be used to manage short-term price spikes due to supply disruptions. However, storage capacity can also explain some short-term price movements. For instance, if storage is full, prices will be depressed and oil producers have to reduce production. Conversely, cheaper storage would provide producers and traders with the option to store oil in order to sell in the future at potentially higher prices. Transportation infrastructure and capacity helps to connect global prices and can influence the price of one blend of crude oil relative to others.
However, it is not yet clear if there is an appreciable impact of this concern on oil prices or the stock prices of energy companies. Refining and Consumption Refining capacity is an indicator of the maximum supply of oil products. Demand can be gauged from the consumption of crude oil and the consumption of individual refined products. Refinery throughput or capacity utilization is another measure of the demand for refined products. 7 Oil production and consumption by region Source: BP Statistical Review of World Energy 2014.
Sectoral and company performance relative to the market influences demand for new equity issuances. 6). 5 Return on invested capital vs. weighted average cost of capital for airlines Source: © International Air Transport Association, 2015. Economic Performance of The Airline Industry. Mid-Year Report, 2014. All Rights Reserved. Available on IATA Economics page. 6 Airline stock index performance vs. S&P 500 Data Source: Bloomberg. performance of the industry in the future and broader economic factors like GDP growth, liquidity, regulations, etc.
Fuel Hedging and Risk Management: Strategies for Airlines, Shippers and Other Consumers by Simo M. Dafir, Vishnu N. Gajjala