🛢️ Interactive Learning Tool

CRUDE OIL TRADING SIMULATOR

Understand physical trading, hedging, pricing & risk reports — by doing it yourself
WTI FRONT
$83.20
▲ +0.70
BRENT FRONT
$86.65
▲ +0.65
BRENT/WTI
$3.45
▼ -0.05
WCS DIFF
-$13.80
▲ +0.40
CURVE SHAPE
BACKWARDATED
mkt tight
Step 1 — Enter Your Physical Trade
🛢️ Think of this like placing a purchase order for actual barrels of oil that will be physically delivered next month. You are ARK-O&G's trader. You're buying crude from a producer. Set the parameters below and watch what happens.
ALL-IN PURCHASE ECONOMICS
Volume1,000,000 bbls
Benchmark price$82.50/bbl
Differential+$1.20/bbl
All-in buy price$83.70/bbl
Total deal value$83,700,000
What Just Happened? — The Trade Flow
You Buy
1,000k
bbls WTI
→
From
Permian
Producer
→
Delivered
Cushing,
Oklahoma, May
→
You Sell To
Refinery
or Trader
⚠️ You now own oil worth $83.7M. If the WTI price drops by $5 tomorrow, you just lost $5,000,000. This is why you MUST hedge immediately. Go to Tab 3.
Why Differentials? — The Key Concept
🔒
FIXED PRICE
Agree $82.50 today. Done.
YOU own all price risk
Used when producer wants certainty
📊
DIFF DEAL
Pay: WTI average + $1.20
Price floats. You only risk the $1.20
90% of global physical trades
🧠 SAP analogy: Think of the benchmark (WTI $82.50) like a standard cost in SAP — it changes market-wide. The differential (+$1.20) is your price variance — the extra you pay/receive for that specific grade, location, and deal. Your job as a trader is to buy low diffs and sell high diffs.
Monthly Average Pricing — Watch It Build Day by Day
📅 When you buy "May crude", the price isn't set on one day — it's the average of every business day's settlement price in May. Click through the days below to see how the average builds up and your "unpriced" risk shrinks each day.
MAY 2026 — PRICING CALENDAR
DAYS PRICED
0
of 21 business days
Priced (locked)
0%
Unpriced (risk)
100%
RUNNING AVERAGE PRICE
—
per barrel so far
UNPRICED VOLUME AT RISK
1,000,000 bbls
Risk: $1,000,000 per $1 move
3 Pricing Mechanisms — Side by Side
Mechanism How Price Set Who Uses It Your Risk Hedge With
Monthly Average Average of all business days Term contracts, pipelines Smoothed price risk Monthly Average Swap
BL Window 5 days around ship loading Cargo / tanker trades 5-day window risk Dated Brent swap for window
Fixed Price One agreed price today Producer hedges, retail Full flat price risk Futures (sell short)
🧠 Key insight: With monthly averaging, your price risk is like a melting ice cube — it starts at 100% on Day 1 of the month, and shrinks to 0% by the last pricing day. As each day's price gets "locked in", that slice of your volume is protected. Your hedge must match this — which is why swaps (not futures) are used for physical averages.
Hedging Simulator — See Your Risk in Real Time
🛡️ You bought physical oil. Now simulate a price move and see how your hedge protects you. Without a hedge, a $5 drop wipes millions. With a hedge, you're protected — your profit comes only from the differential, not the flat price.
YOUR HEDGE POSITION
Hedge status: FULLY HEDGED
PHYSICAL P&L
$0
price moved to mkt
HEDGE P&L
$0
futures/swap gain/loss
NET P&L (PHYSICAL + HEDGE)
$0
← This is why we hedge
The Hedging Flow — Visual
🛢️
PHYSICAL
LONG 1,000k bbls
Bought @ $82.50
↓ if price falls, lose $
+
📄
HEDGE (SWAP)
SHORT 1,000k bbls
Sold swap @ $82.45
↑ if price falls, gain $
=
✅
NET RESULT
PRICE RISK = ZERO
P&L from diff only
+$1.20 diff locked ✓
⚠️ Basis Risk remains! Your physical is priced at WTI + $1.20, but the swap settles at WTI average. The $0.05 difference between the swap ($82.45) and physical ($82.50) is your residual basis risk. On 1M bbls, that's $50,000. This tiny mismatch is what traders manage daily.
Forward Curve — Interactive Builder
📈 The forward curve is a snapshot of today's prices for every future month. Toggle between Backwardation and Contango to see the shape change — and understand what each shape tells you about the market and how to trade it.
MonthPrice ($/bbl)Spread to PromptSignalTrading Action
What the Curve Shape Tells You
BACKWARDATION
Spot > Forward
Market is tight today
Demand > Supply right now
Don't hold inventory long
Sell forward = lose money on spread
Move barrels fast!
CASH-AND-CARRY: ❌ Not profitable
CONTANGO
Spot < Forward
Market is oversupplied
Supply > Demand right now
Holding inventory = rewarded
Buy spot, sell forward = profit!
Fill up tanks & tankers!
CASH-AND-CARRY: ✓ Profitable
🧠 SAP analogy: The forward curve is like your fiscal calendar with budgeted prices — except these prices are set by the market in real time. Backwardation = everyone wants inventory NOW (like year-end demand surge). Contango = inventory is piling up in the warehouse (like overstock in WM module).
Your 5 Daily Reports — What Each One Answers
📋 Every morning you read these 5 reports in order. Think of them as 5 questions you must answer before you trade a single barrel. Click each report to expand it.
📍
1. Position Report
Question: "Where am I? Am I properly hedged?"
READ FIRST →
💰
2. Mark-to-Market (Valuation)
Question: "What is my book worth at today's prices?"
READ 2ND →
⚠️
3. Exposure / Risk Report
Question: "How much can I lose? Am I within limits?"
CRITICAL →
📊
4. Commercial Margin Report
Question: "Am I actually making money after ALL costs?"
THE REAL SCORE →
🏦
5. Capital Charges Report
Question: "Is this trade efficient with company capital?"
SENIOR FOCUS →
End of Day Dashboard — 5pm Every Trading Day
🌅 This is what every senior trader sees at market close. The EOD report is your daily scorecard. Red numbers demand action tomorrow. Green numbers confirm your strategy is working. Use the controls below to simulate different market scenarios.
END OF DAY REPORT
CRUDE AMERICAS BOOK — 28-MAR-2026
REPORT TIME
17:00:00
TODAY P&L
+$153,770
MTD P&L
+$1,240,000
VaR STATUS
42% USED
POSITION
FLAT ✓
MARKET CLOSE PRICES
WTI MAY
$83.20
▲ +0.70
BRENT MAY
$86.65
▲ +0.65
BRENT/WTI
$3.45
▼ -0.05
WCS DIFF
-$13.80
▲ +0.40
TRADES EXECUTED TODAY
TimeActionVolumePriceCounterpartyPurpose
09:14BUY300k bblsWTI-14.20CenovusWCS June cargo
10:32SELL200 lots$0.45 sprdGoldman SachsJun spread trade
14:15SELL300k bbls swap$81.80ExchangeHedge WCS buy
TOMORROW'S PRIORITY ACTIONS
🔴Find buyer for remaining 200k WTI May — unsold, capital cost running
🟡Confirm June pipeline nominations with operator by 10:00am
🟡WCS diff outage in Canada — may strengthen further, consider adding longs
🟢Vessel "Pacific Star" loading May 5 — all nominations confirmed ✓
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