Strategies and Delivery Basis
Strategies of Using Gas Oil Physical Delivery Futures
| Strategy Type | Description |
|---|---|
| Hedging Gas oil price rise risk | In case a hedger needs to buy gas oil in future and he wants to secure himself from price rise on gas oil, he buys a futures contract on this underlying asset already today for the date when he supposes to buy gas oil (long hedge). Buying a futures contract fixes the gas oil bid price and secures the trader from a possible price rise in future. |
| Hedging Gas oil price fall risk | In case a hedger needs to sell gas oil in future and he wants to secure himself from price fall on gas oil, he sells a futures contract on this underlying asset already today for the corresponding date (short hedge). Selling a futures contract fixes the gas oil offer price and secures the trader from a possible price fall in future. |
| Oil price rise/fall "leverage" trade | Gas oil futures are attractive instruments for a price fall/rise speculation as the leverage is 1:13 (The minimum authorized security deposit for each futures position is 7,5% of its price). |
| Short selling | Gas oil futures enable traders to speculate for price fall even if they do not have any gas oil at their disposal. |
| Calendar Spread | In case traders have several futures contract outstanding, they can speculate for extension or divergence in their price spreads. |
Delivery Basis Description
| Basis | OJSC "Mostransnefteproduct" the line manufacturing dispatch station "Volodarskaya" (further referred to as the VLPDS) situated on the following address: Konstantinovo village, Ramensky district, Moscow region. |
| Basis specification | The biggest oil plant in the Central region of Russia The possibility to pump oil products from many oil refineries situated in Moscow, Ryazan, Samara, Ufa. The infrastructure of oil products acceptance, storage and production of total capacity 250 000 cubic meters. |
| OJSC "Mostransnefteproduct" specification |
OJSC "Mostransnefteproduct" is a subsidiary of the OJSC "AK "Transnefteproduct". It performs its activity in the Moscow region area. Its key activity is an oil products transportation. The total length of the oil-products pipelines in a single-line crossing is 1151 km. The main area for oil products transportation is the tariff area between the oil refinery in Moscow and the VLPDS. |
| OJSC "Mostransnefteproduct" empowerment | OJSC "AK "Transnefteproduct" is responsible for specifying routes and working out month performance targets for accepting oil products for further exportation from an oil refinery as well as for selling on the domestic market. The contracts for transportation, storage and oil-loading on the home market are executed by OJSC "Mostransnefteproduct" at their own expense. At present the above stipulated joint-stock company performs the transportation of the oil products on the following tariff points: VLPDS – "Domodedovo" airport; VLPDS – "Vnukovo" airport; VLPDS – "Bykovo" airport; VLPDS – "Sheremetevo" airport; VLPDS – oil-refining station "Novoselki"; VLPDS – oil-refining station "Nagornaya"; VLPDS – oil-refining station "Solnechnogorskaya"; VLPDS – gasoline service statons situated on the Ring. |