How to use Bloomberg - Commodity market essentials

Welcome to the commodities session of the Bloomberg Essential Online Training Program. My name is Anoori, and I’m a commodities specialist here at Bloomberg. Today I’ll take you through the basics of navigating our commodities functionality. We’ll begin with a brief overview of how to locate and assess both commodities spot and futures tickers, and finally discuss some basic analytics that can be utilized with information that we found.

    To begin the session, please press the yellow commodity key on your – in your Bloomberg keyword and press go. This will take us to our main commodity menu page, as shown here. From here, we can select functionality for all our commodity markets, as well as news and analytics. Let’s focus on the sections category for now. These will take you to the main pages catered to that particular sector. Let’s choose oil.

    Now you see new categories with the top functions within that category. Let’s start with searching for spot prices or prices for immediate crude delivery. Choose B oil. Here we have wholesale crude spot prices by region. The benchmark for the US is WTI Cushing, which is a light sweet crude delivered at Cushing, Oklahoma. This crude spot price is priced in dollars per barrel. You’ll see that it’s currently priced at 104 spot 96. You can also see spot prices for other regions using the tabs at the top of the screen.

    Since crude oil is as – is of little use in its crude form, let’s take a look at the prices of crude products by selecting the products button from the red toolbar. Crude is refined into products such as gasoline, heating oil, diesel and fuel oil. You can use the gray buttons to explore the pricing of all of those products.

    It is important to note that they’re quoted in different units. For example, if you right click on one of these gasoline tickers and select the description page, you’ll see here that it’s quoted in US little D per gallon. The little D means cents, so it’s quoted in cents per gallon. Let’s now go back by using the green – by X’ing out of this screen and then using the green menu key on your Bloomberg keyboard to go back to the oil menu.

    Let’s now choose option 5, CTM or exchange contracts. CTM is one of the most important and essential commodity functions on our terminal. In general, the commodity space is heavily influenced by its futures contracts and by the exchanges that they trade on. Futures contracts are standardized contracts to buy or sell a specified commodity of a standardized quality and quantity at a certain date in the future.

    In order to navigate this page, we must first know what commodity we are interested in finding. For this session, let’s choose crude oil. Please select option 9, crude oil. Now we have navigated to our crude oil contract tables screen. Here we are showing all crude oil spreads, options, strategies, or OTC, or over-the-counter, tickers that we currently have available to view. There are multiple sort options here, so let’s briefly touch on a few before we continue.

    As you can see from the screen prevented – presented, it defaults showing all, with all types selected. In addition, I’ve chosen to display the open interest and volume on these contracts. To change the columns to a different metric, click on the 93 customized data column button from the red toolbar, and you’ll be able to customize what the columns display about each contract. You can also click on any column header to sort the column by that measure, as I am here.

    Now that our sort defaults are set by open interest, let’s choose a contract. Nymex WTI is the most heavily traded commodity future in the world. As well, it will our example for the remainder of the session. Choose WTI from the – from the top of the list. When you do, you’ll see here – as you see here, a pop-up window appears with four options. We will focus on CT, or contract table. You can choose CT directly from this menu, or you can manually input the command by typing CLA, pressing the commodity key, and then typing in CT, as shown here. Then hit enter.

    We are now brought to our next essential commodity function for commodity futures. It will allow us to view the entire contract table for the futures series that we previously selected. In our example, Nymex WTI has multiple contracts stemming out monthly well into the future. You can see this under ticker here, and if we scroll down, you’ll see that they extend all the way out to December of 2020. In addition, they are monthly contracts.

    Another option is the ability to change the date historically. For instance, if we choose a date in the past, it will show us the same information with historical settles (ph), as well as the historical tickers on the left hand side. Watch as I enter June 1, 2011. The tickers and the settles have changed to a date, that particular date in the past.

    In addition, under session we can choose combined session, or we can choose just the electronic or PIT (ph), which is now the open outcry session. In addition, along the top, we have the option to view the spreads. The spreads are simply the calendar spreads between one month and the next month after it. These are viewed heavily by the market.

    If we return to the page that we were on before under futures, it’s also important to note that we can pull up individual information on each contract. For instance, if we’d like to see more information about the current contract expiring in June 2012, we can right click and we’d be given a menu with options for – to view the description, GP, GIP, or intraday price, as well as OMAN for the option monitor for that given contract.

    However, for this session, let’s continue and move on to viewing the Nymex crude oil forward curve, which is essentially the information we see on the screen in a chart format. To do that, we can go about it in two ways, the first being the 8 curve button that you see here, where you can actually see a small version of the graph. And if ou click on the title, it will take you directly to the CCRV screen.

    What we can also do, and what I’m going to do, is pull up the CCRV screen manually by typing CCRV enter onto the command line. As you can see, once we have run the screen on the futures ticker, it will direct us immediately to the current forward curve. The forward curve simply plots the current prices for each contract in the series and graphs them on a single line. In essence, these will be all 95 contracts plotted individually out until December of 2020.

    At the top in the amber box, is our future CLA commodity. To the right are a number of different periods that you can click on to see the graph as of. For example, click on 1W for the graph as of one week ago. The curves button at the top right will let us update more dates and edit defaults, such as the currency, the units, and the lower display panels.

    For this example, let’s view the WTI curve – forward curve historically on two days. As of one week ago, and as of two years ago. As we already have the one week ago and the live curve displayed, unselect live to remove that curve. Then let’s choose the button custom, and enter 2 for 2 years ago. As you can see from the right, it chooses specific days that are trading and not – will not choose weekends.

    The importance of a chart similar to this is to view two basic concepts on commodities, the curve shapes contango and what we call backwardation. Contango is the upward-sloping curve, which is considered the normal yield curve. The price for future delivery is higher than the spot price.

    This is considered normal due to a future representing spot price, in addition to what we call the cost of carry. The cost of carry includes the fees and the interest that you incur when you store and then deliver the commodity in the future. We see this example looking at the curve – looking at the curve as of 2010.

    Backwardation though is the opposite condition. The price of the future delivery is less expensive than the spot price. If the price of the future naturally increases with the cost of carry, then it might be important for you to consider – for you to further research why maybe backwardation has occurred. But remember, supply and demand are essential to these conditions. Looking at the curve as of one week ago, we see that the WTI curve is currently in backwardation.

    It’s important to note that we have the ability to change some of the other settings on the screen that we’re viewing using the settings button on the top right. For instance, the axis and the color. Also, under 90 actions, we have the ability – to save the chart. This will allow us to save – to pull up the chart at any given point. Also, you can use the 90 actions create simple chart, and this will allow you to search the available curves by category or using the amber box at the top to filter the results.
   
    There’s also a tab for the most recently viewed curves. So if you looked at a curve a few days ago and cannot remember what it is, you’ll be able to get back to it from here. Lastly, if you saved a curve, there’s a saved tab where each curve that you saved and its name will be listed. You can also look at the number next to the CCRV and use that to load it without going through this menu. For example, typing CCRV 19 will bring a past WTI curve that I’d saved in the past.

    Now that we’ve assessed the forward curve or where the market perceives the price of WTI crude to move in the future, let’s compare the information that we’ve gathered with our contributed forecasts. In order to do that, please run the function CPFC and hit enter. As you can see from the initial view of the page, we are brought initially to energy, but you can use this drop down at the top to toggle between metals and agriculture as well.

    Then for each commodity, you’ll see that we’re given both the forward curve on the top line and the forecasted values below that. It’s important to note before getting more in depth with the function that the forward curve itself is a weighted average of the various contracts within each quarter or within each year. We do this in order to maintain consistency with the weighted average calculations we use to provide our forecasts.

    In addition, each of the forecast’s values, as well as the current forward tickers, are tickerized for historical purposes. By right clicking with your mouse on any of the values, for instance, you’ll see here they’re presented with a ticker, as well as a drop-down menu with GP historical price graph options.

    To continue with our example, let’s focus on option 1 for Nymex by clicking on it. Here we have access to greater forecast data, including who and what each of our contributors has submitted. We are able to use the amber box at the top to change the as-of date to see forecasts submitted in the past. In addition, we have the information for the median, the mean, high, low, current, forward, and the difference.

    At the top, we also have the ability to chart. Once we do, we can chart any of those individual data sets, as well as each analyst individually as a chart as well. From the top of the detailed page, we also have the ability to view a histogram, as well as automatically download the data into Excel.

    At this point in our basic seminar, we have walked through finding the commodity spot and futures tickers, viewing a particular contract series, charting its forward curve, and finally comparing that curve to its respective forecasts. For the last part of our session, let’s focus on functions for finding energy statistics, or fundamental data.

    The first is our economic release page for all US energy on ECO10. Every Wednesday at 10:30 a.m., the US Department of Energy releases its crude oil and refined product inventory statistics. As we mentioned with the forward curve, supply and demand are essential to both backwardation and contango. Inventory statistics are directly related to those curves. Specifically, inventory and price tend to have an inverse relatoinship.

    Also at 10:30 on Thursdays, we have the same releases or similar releases for natural gas. This page that we’re looking at now is a live economic release calendar where we can view current, historical, as well as upcoming dates and times for these DOE and other statistical releases.

    In addition, for each event displayed, we can add alerts in advance or upon the release time as well. To do this, let’s click on the small message icon to the left of a given event. You have the options under alert to have alerts come to you on release, in advance of the release, or on survey change. If you select it, it allows you to specify how you want the notification, either a message in a Launchpad pop-up – just a message or just a pop-up. And you also can have an audio alert set.

    To point out the specifics of the page, we can see here that we the date, time, the name of the event, the period which it represents, the actual release, as well as the prior release. In addition, at the top we can change the country as well as the type of release that we want to see. The date as well can be dated back to see historical releases. In addition, under option 1, we can choose to create a new custom calendar in which we choose which regions and topics we’d like to see the calendar for.

    The other screen to see releases by the various reporting entities is a screen called NRGZ. You’ll see that the screen wakes up to the oil – to be oil in the amber box on the left, but you can use that drop down to toggle between the other energy sectors. The tabs along the top display the data from the DOE, API, BP and IEA, the major industry sources of inventory and production data. For example, we can click on DOE and then the DOE-EIA weekly table.

    See how expanding the plus signs next to any of the blue lines will allow you to see further detail. Additionally, you can use the one chart path button at the top on the red toolbar to view the most commonly looked at graphs by analysts in this industry.

    Now that we’ve seen the most commonly looked at energy statistics, what if you were looking for all of the fundamental data on a particular topic there is? There is a screen that you can utilize. The screen FDM houses all of the fundamental commodities data on the system. Use this screen like a search engine by typing your keywords in the amber box, or, as I would like to demonstrate, you can also use the categories from the bottom left.

    For example, if you click on oil, it will give you the further divisions within oil. So let’s choose crude oil, and how you see a full list of 313 pages worth of crude oil fundamental data that we have on the Bloomberg system. For example, let’s say that we wanted to know what global crude oil production was. You can change the data type to production and the location to global. We have three sources providing figures, as seen here. Baker Hughes, British Petroleum, and the Energy Intelligence. Right click to see the ticker and to navigate to a table or a graph of the data set.

    You can also save these tickers to a favorites folder within the FDM screen. Simply check off the boxes next to the ticker, and then select 98 output, FDM favorites, selected tickers. A menu pops up where you can add a new tag. Oil, global, production. Now if we use that green menu key to menu back to the main FDM screen, under my favorites we’ll see that I now have a folder for oil global production, and those three tickers are housed within it.

    Finally, now that we have found a way to get tickers on fundamentals in oil, we can also see where the global energy assets are on a map. We have a great mapping function called BMAP, or BMAP, where we’ll be able to see energy assets – where all the energy assets are on a map. For example, if you click on energy assets from the sixth search option on the right hand side, you’ll see that we have the ability to search for global oil refineries, power plants, storage tanks, pipelines, and many other global energy assets that we have within the database on the system.

    For example, click on global oil refineries. Once we select that option, you see that a little pencil icon appears next to it. If you click on this, it allows you to further filter the data that you are trying to find. For example, if you click on outage status, we can choose to only see those refineries that are currently operational. One update to save that change, and then 99 to go to the next screen. You’ll see here that we also have the ability to enter in the name of a company to only see the assets that are owned by company.

    Next takes us to geographical region. If you click on 7 edit, you’ll have the ability to select only for particular countries or for all countries. Let’s go ahead and select the US. One search now plots those assets on the map. For our example, let’s select global oil refineries. Once we check off any of the boxes next to the asset type, a pencil will appear that will allow you to edit the details further. Please click the pencil.

    You’ll see here that you have the ability to select a certain number of capacity in barrels or an outage or status of the global oil refinery that you would like to search for. Let’s select all for now. Using 99 next at the bottom, we can also search by a particular company’s assets, or using 99 next, by geographical region or PAD region. Let’s search by the US. So using geographical region, 7 edit, you can select all countries or check off the box next to a particular country. In this case, the United States.

    One search now plots these assets on our map. As we can see here in the top right hand corner, there are 161 oil refineries in the United States. The map will plot the assets by granularity depending on how far you are zoomed out. So using the scroll option on your mouse, if you scroll in, you’ll be able to see more detail about where the assets exactly are. Clicking on one will give you information as – like this, like the asset name, the operator, and the capacity.

    You can use the data tab from along the top to be able to see all of the assets that have been plotted in much more detail, including the location, if there are any outages, what the current status is, and what the capacity of that particular refinery is.

    As our lesson concludes, let’s quickly recap in some of the important features and functions we’ve touched on today. To view the regional spot market, we briefly touched on oilgo and its sub-pages. The futures markets are heavily integrated into the commodity space. As a result, we walked through how to find futures on our contract table menu. We pulled up an example contract series on CT, and then how to finally chart that series over time on CCRV.

    In addition, in order to gauge economist’s forecasts versus a market’s implied moves in the futures pricing, we used the function CPFC to then compare to the futures market. Finally, we viewed our ECO10 and NRGZ statistics pages for live releases, as well as pre-canned charts. We saw FDM for searching for further fundamentals, and BMAP to plot our global energy assets.

    Although today’s session only touched on just a small part of our vast commodity functionality, this lesson was – hopefully helped to foster a foundation to extend your knowledge in the use of the terminal. And as always, if you need any further assistance, feel free to hit the help key on your keyboard twice to access the 24/7 help support desk.