Energy Markets and Marketing Analysis: ENMA7076 Coursework Report

This report delves into the intricacies of energy markets and marketing, examining the interplay of supply and demand in both physical and derivative markets. It explores how these forces influence pricing, particularly within the crude oil market, and analyzes factors driving pricing trends in the futures market. The report highlights key developments in crude markets, focusing on derivative instruments like futures trading, and discusses technological advancements that have improved crude oil extraction and transportation. Furthermore, it examines the regulations imposed by governments and environmental agencies that impact the energy market, including those related to extraction quotas, pricing, and environmental protection. The analysis concludes by showcasing the trends in crude oil prices over time and their implications.

ENERGY MARKETS AND MARKETING
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Supply and demand analysis related to
physical and derivatives market
 Supply and demand of the energy product
affects the physical marketing as well as
derivative marketing(Jamieson Dale, 2011).
 Physical marketing is where buyers physically
meets sellers while derivative market is future
contracts or options.
 For physical market, demand and supply will
influence how these buyers interact with sellers.

 When the demand is very high buyers will be
willing to purchase even at higher prices while
when the supply is higher the sellers will be sell
at lower prices (Report, 2010).
 For derivative market, there might be a future
expectation that the supply will be higher.

 In some cases there will be few consumers willing
to buy at that point and they will go for
alternative waiting for the supply to rise then they
buy large quantity of product(Paul Hirsch and
Bryan Norton, 2012) .
 In a similar scenario, when there is future
expectation that there will be higher demand and
lower supply in future, consumers will buy in
large amount and hoard

Pricing trends on underlying crude
markets
 For underlying crude oil market, it has always been seen
that the trend of market is somehow consistent.
 In this trend the trend is that there is always a consistent
reduction of the price of the crude oil.
 This has been happening even with the increasing usage
of the crude oil product in today´s world(Paul Hirsch and
Bryan Norton, 2012) .
 The reason behind this could be existence of many crude
oil port in the world as well as cheap extraction of these
crude oil.

Factors driving pricing trends on the
futures market
 There are some factors responsible for
the pricing trend in futures market of the
energy products(Jamieson Dale, 2011) .
 These may include factors like future
expectations of extraction of large
amount of crude oil worldwide as well
as exploring on cheaper ways of
extraction of these crude oil.

key developments in crude markets with emphasis on
derivative instruments particularly futures trading
There are some machines and technology which has
made it easier to extract and transport crude oil to
the point of refining.
These has actually help in improving
trading(Jamieson Dale, 2011) .
The use of trucks and pipeline in the transportation
of crude oil will make it easier to sell oil products.

 some machines like pumpjack which has actually
made it easier to extract more crude oil from the
lake and seas sites(Jamieson Dale, 2011).
 The use of the Christmass Tress valve has really
help during the drilling process of the crude oil as
it help to regulate pressure and control the flow.

Examine regulations which may impact the
market
 During the extraction of the crude oil, there are a
lot of regulations which must be put into place by
several urgencies.
 These regulations may include the government as
well as environmentalists.
 The government may put some regulations like the
amount of crude oil to be mined per day.

 Some other regulations which can be put by the
government includes the price which these
extracting company need to sell these crude oils
and to which refining companies should they sell
to.
 For the environmentalist, they need to regulate
how the extraction of crude oil is done to ensure
that there is very little pollution to the environment
like water, air, sound etc.

 From the above statistical data on the trend on prices of
the crude oil, it is vividly illustrated that the exchange rate
reduces with time.
 This can be employed to predict the reduction of price in