Futures Education

Energy

Trading in the energy futures market began in 1979 and, like metals, trading is primarily conducted on the New York Mercantile Exchange. The NYMEX hosts the trading of crude oil, both Brent and light sweet crude, natural gas, heating oil, gasoline, coal and electricity. Next to interest rate futures, energy, and especially oil, is the king of the world futures markets.
Energy is perhaps the most strategic material in world commerce and its price can be exceedingly volatile. The availability and price of energy has a direct bearing on the competitiveness of the economies of industrial and agricultural nations alike. Countries that depend on the sale of energy resources have a vital interest in its price.
The prices quoted are used as global benchmarks for the underlying energy markets, an indication of the confidence that the market places in the integrity of these transactions.

Energy and economics

Interest rates and energy prices have a significant impact on everything that happens in the world. Think about it. When you wake up in the morning, nearly everything you touch, use, or experience is somehow tied to interest rates or energy. You live in a home that has a mortgage. That home is warmed with natural gas or electricity. The plastic bowl that you put your morning cereal in was produced from petroleum products. Most cars on the road are leased or financed and are fueled by gasoline. Interest rates and energy make the world go round!
Energy prices and interest rates generally move in the same direction when viewed over the long term. Rising energy prices often lead to inflation, and eventually inflation will lead to an increase in interest rates. When trading energy futures keep a close eye on the bond market and federal funds rate to help you understand the general direction of the energy market.
Another important economic consideration when trading energy futures is supply. Generally more important than demand, supply is possibly even more important than interest rates. The world runs on oil. Any changes or threatened changes in the oil supply are immediately reflected in price. Your objective as an energy trader is to consider the effects of events on the supply and forecast the impact on energy prices.
Often refineries are a bottleneck in the supply lines of oil. You will often read articles or hear news stories that talk about disruptions at major oil refineries. Even if oil is in good supply, if the refineries can't turn it into gasoline or heating oil, the supply of those products is impaired and energy prices will rise across the board.
With this in mind let's introduce the most traded products in the energy futures market.

Crude Oil

Crude oil is the foundation of energy market. Crude oil is the raw material for the production of gasoline, diesel, jet fuel, boiler fuels and thousands of petrochemicals.
Dominating the energy futures market, crude oil accounts for roughly 40% of world energy supply. This market share and versatility make it the world's most strategic and actively traded physical commodity. Since the introduction of the light sweet crude oil futures contract in 1983, it has evolved into the world's most liquid forum for crude oil trading.
Petroleum is commercially produced on every continent except Antarctica, and in most of the world's nations. Oil is produced in the suburbs of Paris and downtown Beverly Hills. It flows from prolific wells in the Arctic wilderness of Alaska and Canada and the tropical jungles of South America and Southeast Asia. In the United States, all but a handful of states are oil producers.
The world's three largest oil producers are Russia, Saudi Arabia, and the United States. More than half of the world's economically recoverable reserves are found in the Middle East. Since the early 1970s, the oil market has experienced some extreme price volatility, the most recent being a spike in oil prices to nearly $150 a barrel in 2008 related to geopolitical disruptions and a significant devaluation of the U.S. dollar.

Light sweet crudes are preferred by refiners because their low sulfur content and yields of high-value products such as naphtha, gasoline, middle distillates, and kerosene. Since crude oil production involves extensive commitment of resources, often many years in advance, the Exchange's light sweet crude oil futures contract is the most far-reaching of its products, listing contracts up to seven years forward.
Brent crude oil, a light sweet North Sea crude is also used as an international pricing benchmark.
Light Sweet Crude futures contracts trade in units of 1000 barrels. The minimum price fluctuation is $0.01 per barrel and the tick value is $10.00.
Brent Crude futures contracts trade in units of 1000 barrels. The minimum price fluctuation is also $0.01 per barrel and the tick value is $10.00.

Gasoline

Gasoline's primary use is as fuel for automobiles. Gasoline is the single largest volume refined product sold in the United States and accounts for almost half of national oil consumption. Prices are volatile, reacting to political and economic developments that are perceived as being likely to affect the oil industry. Ever-tightening environmental regulations also add to market uncertainty.
The popularity of automobile travel is the primary factor in the demand for gasoline. Retail gas prices are slow to respond to changes in its production costs and the price is relatively inelastic, meaning that even high gas prices at the pump don't seem to have much of an effect on gasoline consumption.
The physical gasoline product underlying the futures contract is reformulated blendstock for oxygen blending (RBOB), a formulation that is blended with ethanol at the truck loading rack. Ethanol use has become more widespread since the phase-out of the additive methyl tertiary butyl ether, which had been used for many years.

Gasoline futures contracts trade in units of 1,000 barrels. The minimum price fluctuation is also $0.0001 per barrel and the tick value is $4.20.

Heating Oil

The principle use of heating oil is in furnaces to warm residential and commercial buildings. Heating oil accounts for about 25% of the yield of a barrel of crude, the second largest "cut" after gasoline.
The heating oil futures contract is also used to hedge diesel fuel, which is chemically similar to heating oil, and jet fuel, which often trades in the cash market at premium to heating oil futures.
Like gasoline, heating oil is relatively inelastic, although consumers will lower their thermostats when prices are extremely high. If prices continue to remain high, consumers will employ substitution products such as electricity or natural gas, provided energy prices have not increased across the board.
A wide variety of businesses, including refiners, wholesale marketers, heating oil retailers, trucking companies, airlines, and other major consumers of distillate fuel oil, have embraced this contract as a risk management vehicle and pricing mechanism. The imposition of federal sulfur standards for diesel fuel has the potential to increase price volatility in some markets.

Heating Oil No. 2 futures contracts trade in units of 1,000 barrels. The minimum price fluctuation is also $0.0001 per barrel and the tick value is $4.20.

Natural Gas

Natural gas is found throughout the world, with leading producers being the United States, Russia and Canada. Natural gas plays a major role in the energy profile of the United States, where it accounts for almost a quarter of total energy consumption.
Natural gas is formed deep within the earth by the decay of organic matter under heat and pressure from many layers of overlying rock and sediment. It is obtained by drilling. Because of its relatively high transportation cost, most natural gas is consumed in the country where it is produced. In the U.S. it is transported to end users through a network of interstate pipelines.
In its raw form, natural gas is composed of several gases and water. The natural gas delivered to your home by the local gas company has been refined to 93% methane, which is colorless and odorless. Sulfur compounds called mercaptans are added to create an odor to warn of gas leaks.
Industrial users and electric utilities together account for approximately half of the market; commercial and residential users combined are approximately 40%. Since the enactment of the Natural Gas Policy Act of 1978, the industry has changed from one that is almost totally regulated to one that operates largely as a free market.

Natural Gas futures contracts trade in units of 10,000 million mmBtu. The minimum price fluctuation is also $0.001 per mmBtu and the tick value is $10.00.

Coal

Coal, which helped power the industrial revolution, plays a significant role in the U.S. energy industry and the economy overall. It is the principal fuel for generating electricity in the United States, accounting for approximately 50% of the nation's total power output.
The New York Mercantile Exchange launched the physically delivered Central Appalachian coal futures contract in 2001, bringing the energy complex full circle to cover all principal fossil fuels. The Central Appalachian futures contract is based on barge delivery along the Ohio and Big Sandy rivers.
The United States has more high-quality coal than any other country, with nearly 30% of the world's bituminous coal reserves. Only China produces more bituminous coal than the United States, but almost all of China's production is consumed domestically. U.S. coal exports, chiefly Central Appalachian bituminous, make up a significant part of the world export market and are an important factor in world coal prices. At current rates of recovery and use, it is estimated that U.S. coal reserves will last more than 250 years.
Because coal is a bulk commodity, transportation is an important aspect of its price and availability. Railroads carry more than half of the coal mined in the United States, often hauling the coal in unit trains of 60 to 120 cars. The inland waterway system is the other major mode for coal transportation.
Coal futures contracts trade in units of 1,550 tons. The minimum price fluctuation is also $0.01 per ton and the tick value is $15.50.

Electricity

Electricity lends itself to futures trading because it meets the three broad criteria needed for successful futures markets: prices are volatile, there is a large, diverse universe of buyers and sellers, and the physical product can be exchanged.
The Exchange provides a series of financially settled futures contracts for on-peak electricity transactions at principal market hubs in New England, New York State, the Mid-Atlantic states, throughout the Midwest, Texas, California, and other western locations.
The contracts are for the on-peak and off-peak periods as defined by the North American Electric Reliability Council, the power industry's operations coordinating group.
Unlike traditional futures contracts that represent a fixed quantity, such as 1,000 barrels of crude oil, or 1,550 tons of coal, the total quantities of power represented by most of the electricity contracts are variable because the number of on-peak and off-peak hours can vary from month to month.
For example, each financially settled monthly PJM futures contract covers 40 megawatt hours (Mwh) for each peak day of the month. The number of peak days can range from 19 to 23, depending upon the month, and the number of megawatt hours represented by the monthly futures contracts will vary:

• 19 peak days per month = 760 MWh per contract.
• 20 peak days per month = 800 MWh per contract.
• 21 peak days per month = 840 MWh per contract.
• 22 peak days per month = 880 MWh per contract.
• 23 peak days per month = 920 MWh per contract.

Electricity futures contracts trade in units of 40 megawatt hours during the peak day. Depending on the number of peak days in the month, the number of megawatt hours will vary as shown above. The minimum price fluctuation is also $0.05 per Mwh.

Summary

The energy markets are rooted in real companies making decisions to hedge their future price risk and speculate in future price direction. The energy market is about real people making real decision about how much energy they will need to run their businesses in the next few months to years. Prices in the energy market are based on real life circumstances that aren't generally influenced by the kind of fictional analysis of Wall Street analysts pushing stocks.
There are a number of guidelines used to keep abreast the energy markets. First, be mindful of OPEC, the trade organization that controls the bulk majority of the world's oil supplies. Changes in OPEC policy will influence the supply of energy and have reaching affects on price. Second, energy supply is made up of production and refining - both play an equally important role in the price and trend of energy. Third, the potential for disruptions can happen all along the supply line. Everything from geopolitics to weather events have the capacity to disturb energy prices. Make sure you are aware of global political and natural weather events. Finally, keep close tabs on interest rates, the dollar and bond markets for signals in the energy markets.

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Analysis Saham Indofood Tbk (INDF)

Saham Indofood Sukses Makmur Tbk (INDF)

Analysis of Indofood shares for short-term trading can still be done by investors and traders, as shares gained 12.63 percent this potential why not? the answer is because of two technical indicators are showing buy signal analysis that will happen in the next few days, two indicators that are stochastic and MACD is showing a perfect buy signal. The stock price of Indofood (INDF) will reach the 4000 target until 4250. purchase price point is at 3875 until 3975 is still possible to go on this stock.

Disclaimer
All decisions related with this analysis is the responsibility of each individual's decision whether to buy or sell because this analysis is only just learning

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Futures Education

Metals

Everybody loves the metals market. It is one of the oldest markets in the world, dating back thousands of years as the discovery of gold, copper and silver influenced significant developments in society. Some of the most sophisticated early metallurgical techniques evolved around the use of copper, which was the first industrial metal. One of the relative newcomers, platinum, was discovered in South America in the early 18th century during the search for gold and silver. Originally known as "little silver," silver that hadn't "grown up," or "unripened gold," platinum was thrown back into the streams that held the alluvial deposits. For many years it was used for counterfeiting gold coins in the New World and Spain.
Today, the New York Mercantile Exchange, or NYMEX, is the largest metal commodity futures exchange in the world. The suite of metals futures traded on the New York Mercantile exchange allow market participants to mitigate price risk in a transparent, liquid, financially secure marketplace.
The New York Mercantile Exchange is divided into two divisions: NYMEX and COMEX. Futures contracts for gold, silver, copper, and aluminum are listed through the COMEX Division. You may have heard of COMEX gold on radio or television programs since it is one of the world's benchmarks for gold prices. Platinum and palladium futures are traded through the NYMEX Division.
The major metals futures market comprises gold, silver, platinum & palladium, copper and aluminum. The first three are considered precious metals and the latter two are considered industrial metals.

Gold

Gold began trading on December 31, 1974, coinciding with the lifting of a 41-year ban on the private ownership of gold by U.S. citizens imposed in the early days of President Franklin Roosevelt's administration during the Great Depression. Today the COMEX gold futures contract flourishes as the world's standard for the gold market.
There is an almost universal appeal for gold as a staple for the supply and expression of wealth. For centuries, gold has been coveted for its unique blend of rarity, beauty, and near indestructibility. Gold is an alluring metal that was once thought to have magical powers. Nations have embraced gold as a store of wealth and a medium of international exchange; individuals have sought to possess gold as insurance against the day-to-day uncertainties of paper money and as an expression of their wealth.
Gold futures provide an alternative to the more traditional means of investing in gold such as bullion, coins, and mining stocks. Gold futures contracts are also valuable trading tools for producers and users of the metal. Commercial concentrations of gold are found in widely distributed areas; for instance, in association with ores of copper and lead, in quartz veins, in the gravel of streambeds, and with pyrites. Even seawater contains astonishing quantities of gold, though its recovery is not economical.
The United States first assigned a formal monetary role for gold in 1792 when Congress put the nation's currency on a bimetallic standard, backing it with gold and silver. During the Great Depression of the 1930s, most nations were forced to sever their currencies from gold in an attempt to stabilize their economies. Gold formally reentered the world's monetary system in 1944 when the Bretton Woods agreement fixed all the world's paper currencies in relation to the U.S. dollar, which in turn was tied to gold. The agreement was in force until 1971, when President Richard Nixon ended the convertibility of the dollar into gold. Today, gold prices float freely in accordance with supply and demand, responding quickly to political and economic events.
Gold is also an important industrial commodity. It is an excellent conductor of electricity, is extremely resistant to corrosion, and is one of the most chemically stable of the elements, making it critical for electronics and other high-tech applications.
A broad cross-section of companies in the gold industry, from mining companies to fabricators of finished products, use gold futures to hedge price risk. Gold also plays an important role in investment strategies as a hedge against inflation and monetary risk.

Gold futures contracts trade in units of 100 troy ounces. The minimum price fluctuation is $0.10 (10¢) per troy ounce and the tick value is $10.00.

Silver

One of the oldest known metals, silver has attracted mankind's interest for thousands of years. In ancient times, silver deposits were plentiful on or near the earth's surface. Relics of ancient civilizations include jewelry, religious artifacts, and food vessels formed from the durable, malleable metal.
Silver also played an important role in the United States monetary system when Congress in 1792 based the currency on the silver dollar, and its fixed relationship to gold. Silver was used for the nation's coinage until it was demonetized in 1965. The turn of the century saw an even more important use for silver as an industrial raw material. Today, silver is sought as a valuable and practical industrial commodity as well as an appealing investment. The largest industrial users of silver are the photographic, jewelry, and electronics industries.
Newly mined metal provides most of the needed supply, and Mexico, the United States, Peru, Poland, and China are the primary producers. Secondary silver sources include coin melt, scrap recovery, and liquidation of private stocks from countries where the export of the metal is restricted. Secondary sources are particularly price sensitive.

Silver futures contracts trade in units of 5,000 troy ounces. The minimum price fluctuation is $0.005 (0.5¢) per troy ounce and the tick value is $25.00.
It is important to note that both gold and silver have mini-sized versions of their respective contracts, making it easier for individuals to trade in this lucrative industry.

Platinum

Platinum production is dominated by South Africa, which accounts for 77% of the world's platinum supplies. Platinum is the principal metal of the six-metal group that bears its name; the other platinum group metals are palladium, rhodium, ruthenium, osmium, and iridium. All possess unique chemical and physical qualities that make them vital industrial materials.
The automotive and jewelry sectors account for more than 75% of world consumption of platinum. Platinum is an important ingredient in the production of catalytic converters. Other uses include glass manufacturing, chemical production, petroleum refining, high-technology electronics, and medical applications.
Platinum is among the world's scarcest metals; new mine production totals only approximately 6.5 million troy ounces a year. In contrast, gold mine production runs approximately 80 million ounces a year, and silver production is approximately 595 million ounces. Due to the scarcity of platinum, like gold, it is also used as a store of wealth.
Because of the metal's importance as an industrial material, its relative low production, and concentration among a few suppliers, prices can be volatile, and platinum is often considered attractive to investors.

Platinum futures contracts trade in units of 50 troy ounces. The minimum price fluctuation is $0.10 (10¢) per troy ounce and the tick value is $5.00.
Closely related to platinum, palladium is the other major metal of the platinum group. It is mined with platinum, which it resembles in many respects, yet there are important differences between the two metals. As with platinum, palladium is also produced as a by-product of nickel mining. Automotive catalysts are the largest consuming sector of palladium, accounting for 66% of demand. Dental alloys account for 14%, electronics, 17%, and others, 3%.
Palladium trades as an independent futures contract in units of 100 troy ounces. The minimum price fluctuation is $0.05 (5¢) per troy ounce and the tick value is $5.00.

Copper

As a primary ingredient in the production of electronics, and one of the oldest commodities known to man, copper, more than any other metal, is said to directly reflect the state of the world economy. It is the world's third most widely used metal, after iron and aluminum, and is primarily used in highly cyclical industries such as construction and industrial machinery manufacturing. Profitable extraction of the metal depends on cost-efficient, high-volume mining techniques.
Due to the international demand for copper, copper prices are directly affected by supply-reducing strikes or political unrest in foreign producing countries. Foreign exchange rates also influence the effective price of copper. Other price factors include government embargos, production curtailments, water shortages, and environmental impact. Most of the world copper trade is controlled by a trade organization called CIPEC, similar to the way OPEC controls the oil market. CIPEC controls roughly 70% of the international trade of copper.

Copper futures contracts trade in units of 25,000 pounds. The minimum price fluctuation is $0.0005 (0.05¢) per pound and the tick value is $12.50.

Aluminum

Aluminum is a lightweight, corrosion-resistant metal and is another important industrial grade metal. Aluminum is used in aerospace, construction material, packaging, automobiles, railroad cars, and thousands of other applications.
Transportation is the largest single consuming sector of aluminum, absorbing approximately 30% of U.S. production. Packaging and aluminum cans take another 20%; building and construction absorbs 10%. The high voltage electric transmission lines that are strung from one end of the nation to the other are often made of aluminum.
Aluminum scrap is among the most easily recycled metals available today. The turnaround between the time a can is tossed into a recycling bin, re-smelted, fabricated, and back on a store shelf can be as little as 60 days.

Aluminum futures contracts trade in units of 44,000 pounds. The minimum price fluctuation is $0.0005 (0.05¢) per pound and the tick value is $22.00.

Summary

Of all the metals traded on the New York Mercantile Exchange, gold and copper are the most actively traded. Gold is the representative for the precious metals and copper is the benchmark for the industrial metals market. When trading the metal futures, be sure to keep tabs on interest rates set by central banks around the world. Make sure you are aware of geopolitical situations. Wars are prominent in many metal producing countries and can disrupt production efforts. Make sure you understand the relationship between currency and metals, the two markets are tightly correlated and movements in one will inevitably create movement in the other.

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