International Oil Trading - Advanced Techniques and Strategic Price Risk Management (TR2) Pre-test

The Oxford Princeton Programme strives to identify the most appropriate training solution for each individual. Consequently, we have devised a questionnaire that you may use to guide you to the most appropriate course and to indicate the level of knowledge you will acquire within International Oil Trading - Advanced Techniques and Strategic Price Risk Management (TR2) course.

The pre-test below is not "graded". It is meant to give you and your training coordinator an idea of how comfortable you are with the prerequisite material. If this pre-test comfortably takes you one hour or less, you are well prepared to enter the course.

All of these pre-tests are reviewed to ensure all delegates are entering at a similar level.

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1. If a tanker charter had been fixed at WS150 and the worldscale flat rate was 5$/Mt what is the freight rate expressed in $/Mt?

a. 6.5$/Mt
b. 7.5$/Mt
c. 30$/Mt
d. $75/Mt

2. If a tanker was fixed for minimum cargo 100,000 Mts at WS 200 was overage 50% on a voyage with worldscale flat rate of 5$/Mt, how much is the total cost of freight if the tanker loads 98,000 Mts?

a. $980,000
b. $100,000
c. $1,020,000
d. $1,000,000

3. If a tanker was fixed for minimum cargo 100,000 Mts at ws 200 and overage 50% on a voyage with worldscale flat rate of 5$/Mt, how much is the total cost of freight if the tanker loads 102,000 Mts?

a. $1,000,000
b. $120,000
c. $1,010,000
d. $1,020,000

4. If a refinery yield is as follows:

Naphtia (and LPG) = 20 wt%
Kerosene = 20 wt%
Gasoil = 20 wt%
Fuel Oil = 30 wt%
Refinery Fuel and Loss 10 wt%

and the products are sold at:

Naphtia (and LPG) = 200$/Mt
Kerosene = 250 $/Mt%
Gasoil = 200 $/Mt%
Fuel Oil = 150$/Mt%

What is the GPW  of this crude oil expressed in $/Mt?

a. 150
b. 162
c. 175
d. 200

5. If crude oil has a GPW of 225$/Mt and one Mt is equivalent to 7.5 bbls and freight is 1$/bbl what is the netback?

a. $29/bbl
b. $323.50/Mt
c. $31/bbl

6. On the following economics which crude oil would you run in your refinery?

Crude GPW Refining Cost Freight FOB price
a. 36 1 1.5 32
b. 24 1 2.5 20
c. 30 1 2.0 25

a.
b.
c.

7. You have purchased 1,000,000 bbls of Brent crude oil loading next week at $25/bbl. With respect to price, today are you:

a. Long
b. short
c. neutral
d. neutral now but long when it loads

8. You have sold 1,000,000 bbls of Brent crude oilat next months Platts average for Brent,loading next month.With respect to price, today are you:

a. long
b. short
c. neutral
d. neutral now but long when it loads

9. You have bought 20kts of gasoil from a Rotterdam refinery and are concerned about price risk that this position may carry.What do you do to minimise the risk?

a. Buy 20 lots of IPE gasoil
b. Buy 200 lots of IPE gasoil
c. Sell 20 lots of IPE gasoil
d. Sell 200 lots of IPE gasoil

10. Which market participant is naturally

a. Crude oil producer
b. Oil refiner
c. airline
d. Trader

11. It is February 25th.You have purchased 40,000 mt of gasoilat a fixed price;the cargo is due to load in Rotterdam today and you have sold it into a New York oilcompany.The sale price will be determined by Platts NYH 2 oilon arrival. It looks like the dealis profitable - how do you lock in the profit? 1mt of gasoilis 315 US gallons.

a. Sell 315• lots of NYMEX heating oil
b. Buy 3151ots of NYMEX heating oil
c. Sell 300 lots of NYMEX heating oil
d. Buy 300 lots of NYMEX heating oil

12. It is February 25th.You have purchased 40,000 mt of gasoil at a fixed price;the •cargo is due to load in Rotterdam today and you have sold it into a New York oilcompany.The sale price will be determined by Platts NYH 2 oilon arrival. It looks like the dealis profitable;which NYMEX futures contract would you use to lock in the profit?

a. January
b. February
c. March
d. April

13.  You have purchased a cargo of jet kerosene and  wish to hedge the risk prior to selling the  cargo in the us; which NYMEX contract would you prefer?

a. Natural Gas
b. Gasoline
c. Heating Oil
d. Sweet light crude oil

14. If you were a bull- would you think:

a. The market is rising
b. The market is falling
c. The market could rise or fall
d. The market will stay the same

15. If you were a bear and wanted to make money, would you:

a. Go long
b. Go short
c.Stay neutral
d. Wait for a month and then go short

16. In a backwardated market relative to the spot price, are future prices:

a. Higher
b. Lower
c. the same as the spot price
d. Higher and lower in random order

17. If you put on a bull spread are you:

a. Selling the outer and buying the prompt
b. Selling the prompt and buying the outer
c. Buying and selling the same month
d. Buying two adjacent months

18. If you thought the value of WTI was about to increase relative to Brent,would you:

a. Sell WTI and buy Brent
b. Buy Brent and sell WTI
c. Sell Brent and buy WTI
d. Buy prompt WTI and sell outer Brent

19. One evening two traders in a London wine bar agree a deal. Under English law is the dealbinding upon their companies:

a. Immediately
b. Only when the contract is written and signed
c. Not until their respective offices open in the morning
d. Not at all as neither were in their offices

20. A European airline buys a jet swap with a fixed price of 250 $/Mt versus Platts Monthly Average Rotterdam Jet barge quote.They also buy physical jet from a major oilcompany in Rotterdam based on Platts Monthly Average Rotterdam Jet barge quote plus 2 $/Mt.

In the first month the Platts quote averages out at 260 $/Mt,after taking account of the hedge what is the net price that the airline has effectively paid for the physicaljet?

a. 262 $/Mt
b. 252 $/Mt
c. 250 $/Mt
d. 260 $/Mt
e. 240 $/mt

21. A European airline buys a jet swap with a fixed price of 250$/Mt versus Platts Montly Average Rotterdam Jet Barge quote. They alson buy physical jet from a major oil company in Rotterdam based on Platts Montly Average Rotterdam Jet barge quote plus 2$/Mt.

 In the second month the Platts quote averages out at 240$/Mt, after taking account of the hedge what is the net price that the airline has effectively paid for the physical jet?

a. 262$/Mt
b. 252$/Mt
c. 250$/Mt
d. 260$/Mt

22. If dated Brent is trading at 10c/bbl over the IPE Brent and the Brent TI spread is 1.70$/bbl, with freight and lightering cost into the USGC is 1.20 $/bbl, what is the breakeven price on offering the Brent as a TI related scale CFR USGC?

a. 40c/bbl over TI
b. Even with TI
c. 20 c/bbl under TI
d. 40 /bbl under TI

23. In three months time a significant number of refineries in NV/ Europe are closed for maintenance. What position should you have on?

a. Buy crude oil futures
b. Buy product futures
d. Rent storage

24. You have sold a cargo of oil to your buyer, and you want some form of security on the deal, which is the best for you?

a. Open credit
b. Telegraphic transfer
c. A bank standby letter of credit
d. A bank documentary letter of credit

25. If you are a seller of a put do you:

a. Have the right to buy from the buyer of the put
b. Have the right to sell to the buyer of the put
c. Have the obligation to buy from the buyer of the put
d. Have the obligation to sell to the buyer of the put

26. It is November. The crude oilmarket is currently:

Physical 26.20

Dec 26.30 Jan 26.70

Storage costs are 15c/bbl per month, finance and transaction cost 17c/bbl. Is there a contango play?

a. Yes
b. No

27. when you sell the crack do you:

a. Sell the products and buy the crude
b. Buy the products or sell the crude
c. Buy the prompt month and sell the outer month
d. Buy the outer month and sell the prompt month

28. Is the action of a sale under EFP terms:

a. Short
b. Long
c. Neutral
d. It depends when the physical pieces

29. Would the buyer of an 18$ call exercise the call in a 16$ market:

a. Yes
b. No
c. Its not his decision
d. Ask the counterparty if he could

30. As the market rises above 18$ does the premium for a 18$ call:

a. Increase
b. Decrease
c. Not change
d. It would be zero

31. You have cargo of crude oil which is priced and have sold futures as a hedge, You have just sold the cargo under EFP terms, the EFP price to be the futures settlement price on the date of the vessel arrival. Do you:

a. Buy the futures back now
b. Wait and buy back the futures when the vessel arrives
c. Buy back the futures over the 5 days following arrival
d. Do nothing

32. I have just brought a $28/bbl put option on Crude. The underlying price is currently $27.50/bbl. Is the option: 

a. Out of the money
b. At the money
c. In the money
d. On the money

33. Fuel oil market prices are as follows: 3%s $150/t; 1%s $160/t
What should 0.5%S be worth?

a. $165.00/t
b. $170.00/t
c. $162.50/t

34. I have just sold a tanker cargo of gasoline into the USA. Did I trade in:

a. Barrels
b. Gallons
c. Long tons
d. Metric tons

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