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Underlier | ||
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Something physical or tangible that may be referenced by a contract or trade Detail Financial derivatives are completely cash-based and usually have no physical underliers Energy derivatives usually have at least one physical underlier, which may be a commodity, e.g. coal or a something related to a commodity e.g. storage The underlier acts as a bridge to the physical world - and usually as a set of reference prices for price-setting and valuation We need to emphasize that nearly all energy trades have at least one physical underlier - few of them actually involve the delivery of energy commodities
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Upstream | ||
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A term principally used in oil and gas context - covering the search for new reserves, exploratory activities, construction of new extraction facilities, and the running of those facilities Detail The gas and oil industries are generally divided into three main sectors - roughly following the life cycle of the commodity Upstream activities follow a sequence:
See also midstream and downstream | ||