1. Crude Oil Dynamics
With
Matthew Baller
Title goes here

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3. Thanks! My name is Justin Paolini… Welcome to this Webinar.
10 years of experience trading FX of which 3 were spent first as a Sales Trader and then as a Broker.
6 years of experience as an educator, with contributions published on Yahoo! Finanza, Trend Online, FX Street
Lecturer for the University of Ancona on Trading and Market Dynamics (since 2012)
My name is Justin Paolini… Welcome to this Webinar.

4. Today’s Guest: Matthew Baller
Lehman brothers/Nomura equity volatility desk
Built and and ran Eagle commodities Crude Oil Options desk
Present - Managing partner M&M Oil Associates 
market leading position in most underlyers we brokered
top 3 shop across oil options
“Much of what I do and what is vital in the oil options market of today is sourcing “liquidity”, when working out to the very back end of the curve the broker needs to be able to find liquidity for his clients, the price is secondary in some situations. I broker right from the active front month contract out until Dec 2021 (rolling) which not a lot of people do as they don't have the relationships in place to deal with these type of flows.” – M.B.

5. Crude Oil Dynamics
Matthew’s firm (M&M) sources liquidity for clients along the futures curve all the way into In order to find liquidity (i.e. The other side of the trade) for large orders (think 15 Million barrels of crude oil) it’s all about contact network.
Who you know is much more important than what you know.
M&M brings buyers (usually energy-focused hedge funds & trading houses like Trafigura) and sellers (usually large producers like BP). Producers need to hedge huge volumes, and usually do so by purchasing PUT options.
1. So BP would likely call M&M and say “I need a price for a December 2020 Put for 15 Mln Barrels”.
2. M&M would call out to their network of clients that might want to take the other side of that bet, hence offering liquidity. M&M would also attempt to negotiate a fair price that finds BP and the seller in agreement.
When & where BP would hedge it’s production depends on the cost of production.
The cost of production depends on where in the world it’s drilled, and whether a government contract is in place. Governments like to deal with fixed (and advantageous) prices.
How to Hedge Funds and trading houses know whether to take the other side of the trade or not? They spend millions of dollars on research projects, to find out what the future oil production around the world (in the various oil fields) looks like. Generally, energy-based hedge funds are structurally LONG crude oil.

6. THANK YOU!