Hedging for Oil Companies
Financial Derivatives can help grow your Oil business
We help you achieve it
Who we are
A well experienced team with extensive expertise in the Oil industry
We advise clients on the purchase and sale of petroleum products and agricultural raw materials with decades of experience in these sectors.
We specialize in wholesale markets for fuels, biofuels, and agricultural products, encompassing the entire supply chain, from refiners, traders, and millers to distributors, service stations, and factories.
Our extensive expertise in the derivatives market (specifically oil futures) and the fuel industry provides us with a comprehensive understanding of trends, clients, suppliers, timing, and other key factors.
What we do
PDS Algorithm offers specialized technical consulting services to wholesale traders in the Oil industry
Our areas of advice include:
- Commercial management and optimization of hydrocarbon logistics and markets.
- Reduction of price and exchange rate risks.
- We offer advice on futures and options on commodities and currencies.
- Guidance on delivery times, market prices and exchange rates.
- Input on commodities sales or replacements.
What we don’t do
We do not provide direct access to markets.
- PDS Algorithm is not a broker nor a dealer.
- PDS Algorithm is not an executing or clearing operator.
- PDS Algorithm is not a general provider of these services, and therefore does not directly handle clients funds.
- PDS Algorithm is not a brokerage open platform of financial assets, currencies or derivatives.
PDS Algorithm only works with Professional Clients
Professional client is a client who possesses the experience, knowledge and expertise to make its own investment decisions and properly assess the risks that it incurs. In order to be considered to be professional client, you must meet two of the following size requirements on a company basis:
- Balance Sheet Total: EUR 20,000,000
- Net Turnover: EUR 40,000,000
- Own Funds: EUR 2,000,000
What are Financial Derivatives?
These financial instruments (such as Futures, Options, and Swaps) enable real-time tracking of an asset’s value (such as stocks, interest rates, bonds, commodities…) with the goal of enhancing the management of the underlying asset. They help mitigate the risks of market volatility and uncertainty, while allowing the exploitation of opportunities in both buying and selling. This leads to competitive advantages that can boost margins and/or volumes. On their own, these instruments serve as speculative tools, but when paired with an underlying asset (like diesel or gasoline), they become crucial for hedging strategies.
Advantages
By working in real-time, financial derivatives make it possible to identify opportunities to reach the market immediately through trigger trading. In this way, a price decrease can be immediately passed on to the market, allowing access to a sale without reducing the margin of the operation or even increasing it if it is not necessary to cede the entire price decrease to the market.
It allows in choosing the selling strategy each day by anticipating the amount to be sold daily by making trades at TAS (Trade at Settlement / at the closing value).
It allows in identifying incremental buying opportunities at times when you can lock in an arbitrage and move the advantage to another time.
Objectives
Due to the financial products that the markets offer (futures, swaps, options) we can hedge these purchases- sales (hedging) by locking in margins and reducing exposure to a fixed price, which otherwise would be speculating.
Our main objective is that trading departments of different commodities can obtain a higher margin in their executions and minimize risks.
In the same way, we advise with fundamental and technical analysis (based on Reuters/Bloomberg and reports) to help decision-making in both the short and long term with prices-trends, logistics, qualities(grades), legislation, inspections and financial analysis.
We train potential trading desks to be independent and function on their own.