Energy Markets and Trading

Lesson 1 • Supply and Demand Fundamentals

Applies core economic principles to energy supply and demand, including price elasticity and seasonal patterns. Provides the analytical lens used throughout the course for price interpretation.

Lesson 2 • Market Structure and Price Formation

Examines spot, forward, and futures market structures and explains how prices are discovered in each. Links market structure to trading strategy selection in later chapters.

Lesson 3 • Energy Commodities and Their Properties

Covers the physical and chemical characteristics of major energy commodities and how those traits shape tradability. Establishes the commodity baseline needed for all subsequent market analysis.

Lesson 4 • Energy Value Chains and Infrastructure

Maps the physical journey of energy from extraction to end-use and identifies key infrastructure chokepoints. Grounds abstract market concepts in real-world logistics and asset constraints.

Lesson 1 • Forward Curves and Term Structure

Introduces contango, backwardation, and the shape of forward curves across energy commodities. Provides the term-structure framework essential for derivatives pricing in the next chapter.

Lesson 2 • Price Indices and Reporting Agencies

Surveys major price reporting agencies and the methodologies they use to construct published indices. Equips students to critically evaluate index reliability and select appropriate benchmarks.

Lesson 3 • Fundamental Price Drivers

Analyzes macroeconomic, geopolitical, and weather-related factors that shift energy prices. Builds the qualitative judgment needed to contextualize quantitative price signals.

Lesson 4 • Pricing Formulas in Physical Contracts

Deconstructs the pricing clauses common in long-term supply agreements, including oil-linked and hub-linked formulas. Prepares students to negotiate and audit contract pricing terms.

Lesson 1 • Derivatives Pricing Fundamentals

Applies no-arbitrage pricing, Black-76, and simulation approaches to energy derivatives valuation. Gives students the quantitative grounding to evaluate dealer quotes and model outputs.

Lesson 2 • Forwards and OTC Swaps

Explains how OTC forwards and fixed-float swaps differ from exchange-traded futures in structure and risk. Introduces ISDA documentation and counterparty credit considerations.

Lesson 3 • Futures Contracts in Energy Markets

Covers the mechanics of exchange-traded energy futures, including margin, settlement, and delivery. Establishes the standardized instrument baseline before introducing OTC variants.

Lesson 4 • Options on Energy Commodities

Introduces calls, puts, and key Greeks for energy options, with emphasis on practical payoff profiles. Prepares students to use options for asymmetric risk management in later chapters.

Lesson 1 • Physical Deal Structures

Examines the key terms in physical supply agreements, including volume, quality, delivery point, and pricing. Provides the contractual foundation for understanding trade execution workflows.

Lesson 2 • Trade Execution and Deal Capture

Walks through the front-office workflow from price discovery to deal confirmation and system entry. Highlights common errors in deal capture that create downstream risk and settlement problems.

Lesson 3 • Settlement and Invoicing

Details the post-trade process of calculating, issuing, and reconciling invoices for physical energy trades. Connects accurate settlement to credit exposure management and cash flow forecasting.

Lesson 4 • Cargo and Inventory Management

Explains how traders manage physical inventory, optimize storage, and coordinate cargo movements. Introduces the concept of physical arbitrage as a profit driver.

Lesson 1 • Hedging Strategies for Energy Firms

Applies derivatives instruments from the previous chapter to construct hedges for producers, consumers, and traders. Evaluates hedge effectiveness and the trade-off between cost and protection.

Lesson 2 • Market Risk Measurement

Introduces Value at Risk, Expected Shortfall, and sensitivity measures for energy portfolios. Equips students to interpret risk reports and challenge model assumptions.

Lesson 3 • Operational Risk and Controls

Identifies key operational failure points in energy trading and the internal controls that mitigate them. Links control design to the trade lifecycle steps covered in the physical trading chapter.

Lesson 4 • Credit Risk and Counterparty Management

Covers credit exposure measurement, collateral management, and counterparty due diligence in energy markets. Prepares students to structure credit-efficient trades and manage exposure limits.

Lesson 1 • Market Abuse and Manipulation

Defines prohibited behaviors including wash trading, spoofing, and benchmark manipulation in energy markets. Trains students to recognize red flags and escalate concerns appropriately.

Lesson 2 • Regulatory Frameworks for Energy Trading

Surveys the functional categories of energy market regulation, including market integrity, transparency, and systemic risk rules. Provides the regulatory map needed to navigate compliance obligations.

Lesson 3 • Compliance Program Design

Outlines the components of an effective energy trading compliance program, from policies to surveillance. Equips students to assess gaps and recommend improvements in their organizations.

Lesson 4 • Sanctions, Anti-Money Laundering, and KYC

Applies sanctions screening, AML controls, and know-your-customer processes to energy trading counterparties. Highlights the unique risks posed by commodity flows in high-risk jurisdictions.

Lesson 1 • Fundamental and Quantitative Trading Approaches

Contrasts fundamental analysis with quantitative and algorithmic approaches to generating trading signals. Prepares students to evaluate and combine both methodologies in practice.

Lesson 2 • Optimization and Capital Allocation

Applies portfolio optimization techniques to allocate risk capital across trading strategies and commodities. Connects optimization outputs to risk-adjusted performance measurement.

Lesson 3 • Spread Trading Strategies

Covers calendar, location, and inter-commodity spread trades and the market conditions that make them profitable. Builds on forward curve and basis concepts introduced in earlier chapters.

Lesson 4 • Portfolio Construction and Book Management

Explains how trading books are structured, risk-bucketed, and monitored across time horizons and commodities. Establishes the portfolio view that underpins strategic decision-making.

Lesson 1 • Power Market Evolution

Analyzes how high renewable penetration, storage, and demand flexibility are transforming power market design. Connects evolving market rules to new trading strategies in electricity.

Lesson 2 • Carbon Markets and Emissions Trading

Covers cap-and-trade systems, carbon offsets, and voluntary carbon markets as tradable instruments. Equips students to value carbon allowances and integrate them into energy trading strategies.

Lesson 3 • Hydrogen and New Energy Carriers

Introduces green, blue, and grey hydrogen as emerging energy commodities and their nascent market structures. Prepares students to assess hydrogen's role in future energy trade flows.

Lesson 4 • Geopolitical Shifts and New Trade Flows

Assesses how energy security concerns, LNG expansion, and supply chain realignment create new arbitrage and risk. Integrates geopolitical analysis with the trading strategy skills developed throughout the course.