EBF 301
Global Finance for the Earth, Energy, and Materials Industries

Lesson 3 Introduction

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Overview

In 2008, the price of crude oil on the New York Mercantile Exchange (NYMEX) hit an all-time high of $147 per barrel. And, within (6) months, the price had fallen to about $35. Again, in 2014, oil was over $100/Bbl in June only to fall to below $50/Bbl by December. While many factors led to these "peaks and troughs, the nature of futures trading and the Exchange itself made this possible. The New York Mercantile Exchange has been around since the late 1800s here in the US, and it is still the most influential financial energy commodities exchange in the world. In this lesson, we will explore the history of the Exchange, how it functions, the participants, and the commodities traded.

Learning Outcomes

At the successful completion of this lesson, students should be able to:

  • Understand the history and development of the Exchange
  • Know the commodities traded
  • Identify the components of a standard NYMEX contract
  • Know the difference between “pit” and electronic trading
  • Recognize various exchange “floor” personnel and players
  • Understand the specific contract provisions for:
    • Natural Gas
    • Crude Oil
    • Heating Oil
    • Unleaded Gasoline
  • Understand the importance of the “price discovery” function provided by the Exchange for energy commodities

What is due for Lesson 3?

This lesson will take us one week to complete. There are a number of required activities in this module. The chart below provides an overview of the activities for Lesson 3. For assignment details, refer to the location noted.

All assignments will be due Sunday, 11:59 p.m. Eastern Time.

Lesson 7 Requirements
REQUIREMENT LOCATION SUBMITTING YOUR WORK
Reading Assignment: Chapter 1&2 -Errera & Brown; Bloomberg article. Errera & Brown, Canvas No submission
Mini-Lecture: NYMEX Contracts Mini-Lecture: NYMEX Contracts page No submission
Mini-Lecture: Cushing-NYMEX Crude Oil Hub Mini-Lecture: Cushing-NYMEX Crude Oil Hub page No submission
Lesson 3 NYMEX Prices Activity Lesson Activity page Submit through Canvas
Lesson 3 Quizzes 1 & 2 Summary and Final tasks page Submit through Canvas
Fundamental Factors (on-going) Summary and Final tasks page Submit through Canvas

Questions?

If you have any questions, please post them to our General Course Questions discussion forum (not e-mail), located under Modules in Canvas. The TA and I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.