The Art and Science of Understanding Fundamentals in the Energy Sector

Why do traders place so much emphasis on forecasts and why does the market react when these estimations miss the mark?

For example, for crude oil to have value it must be refined into individual petroleum products such as gasoline, diesel, jet fuel, and liquified petroleum gas. Therefore, crude oil's worth is correlative to the economics of each of its underlying derivatives, approximately sixteen in all. Speculative estimates of weekly inflows and outflows of crude oil and its numerous byproducts is specious, i.e., seemingly plausible, but actually deficient.

The reason for this is that there are numerous factors that affect price volatility. For example, crude oil derivatives are spread across five distinct regional markets, each of which has discrete dynamics. Further muddling any forecasts, seasonal volatility and many other supply and demand fluctuations need to be taken into account.

This session will show the savvy trader how to cut through the noise of readily available market data, extract what is instrumental, and leverage this output to develop robust trading strategies.