F1IE 4200 - Energy Markets

The Energy Markets course provides an in-depth overview of the functioning of oil, natural gas, LNG and electricity markets. This includes the review of supply and demand fundamentals, pricing mechanisms and trading instruments.

The lectures on the oil markets are aimed to explore the current issues concerning the interaction between physical and financial layers of the oil market and to analyse the implications of financialization of oil markets on oil price behaviour. One objective is to describe the evolution of the international oil pricing system and to assess its main features. Another objective is to explain the basic mechanics of financial instruments and how these instruments can be used for hedging purposes and price discovery in the oil market.

The lectures on natural gas and LNG markets give an in-depth review of the evolution of regional and global gas markets, with a particular focus on pricing mechanisms. One objective is to provide students with a systemic view of the supply and demand fundamentals which influence price formation of natural gas in traded markets. Another objective is to describe the evolution of key regional gas markets (including North America, Europe, Asia and South America) and their interaction in an increasingly globalised gas market. The course also provides an introduction to trading mechanisms and instruments relevant for natural gas markets.

The lectures on electricity markets provide a deep dive in the wholesale electricity markets in Europe from theory to practice. From the foundations of power market liberalization and the market design/architecture of European electricity markets to the detailed functioning of electricity markets from the market operator/exchange point of view. In this course the energy short term markets, capacity markets and flexibility markets are discussed in light of the energy transition and the move towards high renewables penetration.

Learning Outcomes:

• Identify and analyse the supply-demand fundamentals of crude oil, natural gas and electricity
• Understand the pricing mechanisms relevant to crude oil, natural gas and electricity
• Understand trading mechanisms relevant to crude oil, natural gas and electricity markets
• Basic theoretic elements behind electricity markets, microeconomics of electricity markets

5.Architecture and functioning of the electricity markets: practitioners perspective

• Key trends and recent evolutions in the electricity market from Intraday to congestion management
• Future outlook for electricity markets going forward: the energy transition

Professional Skills

Fundamental market analysis

Economics of power markets, Finance/trading of electricity and operation of an Exchange, understanding of key challenges for the power system/market

Sessions 1-4: Oil Markets (Bassam Fattouh)

Session 5-6: Electricity Market Design (Philippe Vassilopoulos)

Sessions 7-8: Natural Gas Markets (Gergely Molnar)

Sessions 9-12: Electricity, Transmission, Coal and Carbon Markets (Eleanor Morrison)

A detailed syllabus will be provided before the beginning of the course.