is a demonstration of an oil trading exercise used in the selection
of analysts and associates. The demonstration operates for a trading
period of 22 days, with each day lasting for 12 seconds in real
can buy and sell oil in two ways:
Buy and sell with the spot market. You do this by
selection the number of barrels you want to trade from the drop
down menu and then hitting ‘BUY’ or ‘SELL’. There is a charge for
selling to the spot market.
Agree a future deal offered by another party. These
deals are for set numbers of barrels at set prices for set delivery
dates. They will remain open until the specified expiry date.
If you want to accept the deal, hit the corresponding ‘OK’ button.
trading screen provides you with information.
the top left quadrant, there is a rolling graph. This shows, for
each day, the historical average daily temperature (shown in yellow
dots) for that date, the oil price (blue bars) and the actual temperature
(red bars). The graph scale represents both degrees centigrade
and dollars per barrel.
price of oil is affected by the temperature and by events in the
world. News of what is happening in the world is relayed to you
in the news feed (bottom right quadrant).
are given information about your trading position.
begin with $10m. Cash changes hands at the date of delivery.
in Storage. You
begin with 200,000 barrels.
to Market Oil @ Spot. This
is the value of your oil in storage at today’s price.
Value. Value of your cash and oil stocks.
This refers to whether you have bought
more than you have sold (long), or sold more than you have bought
(short). The agreed future deals are reflected in this figure,
even though the oil has not yet been delivered.
Daily Profit/(Loss). This
is a measure of your trading performance. It is based on the average
price of barrels you have bought and sold, and of the barrels you
have agreed to trade in the future, accumulated over the period.
above, but on a daily basis.
Cost. It costs
you a percentage of the value of your oil stocks to keep them in
Gain/(Loss). If you have cash
reserves you will gain interest. If you are in debt you will pay
rule is that you should maintain oil in storage levels between zero
and 2 million barrels. If you do not, you will be fined.
Demand. This part of the programme does not operate in
the demonstration and can be ignored.
the exercise takes the form of oil trading, it is not a full simulation.
There are differences from the complex world of trading (e.g. that
your deals do not affect the market; that the prices of futures
deals offered by others do not necessarily reflect a solid future
price curve; that there is a fixed percentage ‘buy-sell spread’).
on the [OK] to go to the trading exercise. Then click on the ‘START’
button to begin trading.
the end of the session, there will be a report on your trading performance