Fundamentals Of Oil VERIFIED

By participating in this course, delegates will understand the fundamentals of oil refining, stock management, oil blending, the importance of quality considerations and operational factors that will have an effect on profitability. They will learn the impact of price exposure and price risk management on oil trades as well as legal issues surrounding trading. Delegates will also gain skills on freight activities as used in oil trading.

This is meant to be a helpful overview of the fundamentals of oil painting. If you are a beginner to oil painting these are the core elements to focus on as you learn to paint. However, even if you are not new to painting these are concepts and fundamentals that will be revisited continually. They are core fundamentals that make painting what it is.

One of the most important fundamentals of oil painting is light and shadow. We can refer to this as value or tonal value. Tonal value is even more important than color. If your color is beautiful but your values are not right then your painting will not work. However, if your colors are bad but your values are right on, then your painting will work! So, focusing more on tonal value than color is a good idea when first learning how to paint. Once you get value down, you will be one step closer to creating a more realistic painting.

Color is another big fundamental element when it comes to fundamentals of oil painting. It is a packed topic and can be overwhelming when first learning how to paint with colors. However, breaking it down into easier to understand components can help.

Another explanation for oil price volatility looks to the fundamentals of oil production and energy consumption. Rapid global economic growth led to rising demand for oil, and supply could not keep up at previous oil prices. Because oil supply and demand do not respond much to price changes, at least in the short-term, some argue that relatively small changes in supply or demand can trigger significant price movements. An interagency task force led by the CFTC found that the 2003-2008 increase in oil prices was largely due to fundamental supply and demand factors.

There are two possible kinds of explanations. The first looks to the fundamentals of oil production and energy consumption. Rapid global economic growth has led to rising demand for oil, and supply could not keep up at previous oil prices. But oil supply and demand are inelastic to price changes, at least in the near-term, which some would argue means that relatively small shifts in supply or demand can be expected to trigger significant price movements.

Although the relationship between speculation and commodity prices has been studied extensively, there is no consensus among academics and regulators as to whether speculative trading causes episodes of unusual price volatility. This report provides background on the oil derivatives markets and the different types of firms that trade in those markets. It reviews the concepts of manipulation and excessive speculation. It includes a brief section describing the fundamental factors that affect oil prices. Although the basic question of fundamentals versus speculation remains unsettled, this report provides a context for evaluating the opposing claims.

Both physical and derivative trades (futures, options, and swap contracts linked to the price of oil) contribute to setting the price. It is thus very difficult to disentangle the price impact of trades by producers and commercial users of oil from those of financial speculators who seek to profit by forecasting price trends. Does excessive speculation drive prices away from levels justified by supply and demand fundamentals, or do speculators provide liquidity and facilitate the price-setting mechanism These questions remain controversial. The next sections of this report describe the mechanics of oil futures and the kinds of traders who participate in the market. Although oil swaps and options use different terminology, the economic substance is the same: they are bilateral contracts under which one party gains if the price moves in one direction, and the other party gains if the price moves in the opposite direction.3

More fundamentally, Keynes wrote that \"when the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.\"31 The negative view of commodity speculators is that they may trade on information unrelated to the fundamentals of supply and demand and, in the process, generate prices that harm consumers and volatility that creates uncertainty throughout the economy.

In theory, higher volumes of speculative trading should not necessarily lead to more price volatility, if financial speculators base their trading decisions on the same factors as those of other market participants. But do they The second part of the case that excessive speculation is destabilizing is that speculators do not trade on the fundamentals. The argument is that because financial speculators never produce or take delivery of physical oil, they bring to the market strategies and expectations that, in Keynes' phrase, \"do not really make much difference to the prospective yield\" of the asset. As a result, prices are subject to violent swings even though there has been no significant change in underlying supply and demand.

When oil prices are high, it is common to speak of a \"speculative premium,\" meaning that the market price is higher than what the fundamentals of supply and demand justify, and that the excess is caused by uninformed speculation.42

The CEO of ExxonMobil Corporation addressed this issue in testimony before the Senate Finance Committee in May 2011. Asked what the price of oil would be if it were based solely on fundamentals of supply and demand, he replied that (in terms of the marginal cost of producing the next barrel of oil), \"it's going to be somewhere in the $60 to $70 range.\"43 But he also made more general comments on the role of speculation:

In other words, possible future supply and demand events are properly factored into today's price, even though those events may never occur. Present-day supply and demand conditions are fundamentals, but so are expectations about the future. In general, free markets are expected to distinguish between relevant fundamental information and extraneous \"noise\" that causes prices to drift away from fundamental values.

The argument that speculation is distorting the oil market is based on one or both of two presumed mechanisms: (1) excessive speculation by financial traders is economically (if not legally) equivalent to price manipulation, and (2) speculators introduce unwarranted volatility by trading on information unrelated to fundamentals. The next section of this report briefly analyzes the fundamentals of the oil market and suggests that sharp swings in the price of oil do not necessarily mean that prices are not based on fundamentals.

Positive feedback is a way to describe trend-following. Speculators buy, the price goes up, more speculators buy, and the price continues to rise, regardless of fundamentals. At some point, speculators realize that prices are too high, but buy anyway, betting that they will be able to sell to a \"greater fool\" before the bubble bursts.

Fundamentals of Petroleum Refining - A Non-Technical Introduction is a two-day course presented by the energy training experts at Mennta Energy Solutions. You don't need an engineering degree to understand the fundamentals of petroleum refining! This exciting programme is designed to introduce non-technical oil industry members to the fascinating field of petroleum refining. Learn how a refinery works and how refinery operations affect global oil and product prices.

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