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An Introduction to Fuel Hedging

Natural Gas Hedging for End-Users

The Mercatus Energy Pipeline

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September 2014 Oil & Gas Hedging Update

 

The one year forward curves for crude oil and refined products have all declined significantly since late July with Brent crude oil and Singapore jet fuel leading the complex lower, 4.82% and 4.22%, respectively. The Brent-WTI one year forward curve has narrowed as well since our last update, declicing from $11.08/BBL to $9.83?BBL since late July. On average, crude oil and refined product forward prices have increased by 3.84%%, on average, since our last late July.

October Energy Hedging, Trading & Risk Management Seminar

 

Due to the continued popularity of our energy hedging, trading and risk management training courses, we will once again be hosting the Energy Hedging, Trading & Risk Management Seminar on October 15-16 in Houston.

Sovereign Oil & Gas Hedging - A Different Perspective

 

How Do Sovereign Energy Companies Influence Commodity Markets and Expectations?

Petróleos Mexicanos (Pemex) makes headlines about once per year with its hedging program (see Mexico Said to Begin 2015 Oil Hedge as an example). It is an important event on many levels. In the near term, the sheer size of Mexico’s national oil company’s (NOC) hedging program can temporarily move markets. In the long term, hedging programs likes Pemex’s can offer insight in to long-term energy price fundamentals. In this post we will revisit some of the similarities and differences between sovereign hedging and corporate hedging, review Pemex’s hedging program’s observed effects on near term markets, and discuss how NOC target prices can contribute to long term fundamental analysis.

Crude Oil & Natural Gas Hedging & Marketing Forum Update

 

On September 10, 2014 in Fort Worth, Texas, Mercatus Energy Advisors, Platts, Energy Aspects, Shell, Intercontinental Exchange, KeyBanc Capital Markets, Pioneer Solutions, Opportune, Haynes and Boone will be co-hosting the Crude Oil & Natural Gas Hedging & Marketing Forum.

Oil & Gas Hedging Without Futures, Swaps & Options

 

Financial derivatives do not always provide satisfactory risk mitigation. Your risk profile may be more deeply exposed to risks beyond commodity prices. The market may not be sufficiently developed to allow you to mitigate your risk with fixed forwards, futures, swaps or options. Maybe you are in a location or consume, produce or process a commodity that isn’t traded in with any meaningful volume or transparency to merit hedging with financial derivatives. Maybe the market is supportive, but pursuing an alternative presents a competitive opportunity or more effective use of capital. In this post we explore some of these alternatives to financial derivatives.

Crude Oil & Natural Gas Producer Hedging & Marketing Conference

 

On September 10 in Fort Worth, Mercatus Energy Advisors is co-hosting a crude oil, natural gas and NGL producer hedging and marketing conference. Our partners for the event are Energy Aspects, Pioneer Solutions and Platts with more to be confirmed later this week.

July 2014 Oil & Gas Hedging Update - New Features

 

The one year forward curves for crude oil and refined products have all increased significantly since our June update with Dubai and LLS (light Louisiana sweet) leading the way higher, up 3.55%. The Brent-WTI one year forward curve moved back in the opposite direction over the past month, widening $0.85/BBL to 9.09/BBL. On average, crude oil and refined product forward prices have increased by 2.64%, on average, since our last update.

June 2014 Oil & Gas Hedging Update

 

Since our May update, the one year forward curves for crude oil and refined products are once again mixed with LLS and WTI crude oil leading the way higher, up 2.55% and 2.48%, respectively, and NWE jet fuel leading the way lower, down 0.84%. After widening between April and May, the Brent-WTI one year forward spread has declined by $1.84/BBL to $8.24/BBL. On average, crude oil and refined product forward prices have increased by 0.46% since our May update.

Is Your Crude Oil Hedging Strategy Overly Optimistic?

 

In our last post, we addressed natural gas producers' tendency to be overly optimistic, how it exposed many of them to unnecessary risk, and caused them to to miss opportunities. We used the previous decade’s natural gas price peak and trough to demonstrate the point. Current crude oil prices provide us with a real-time example of a similar situation.

Has Your Gas Hedging Program Failed Because of Your Optimism?

 

Behavioral finance and economics researchers consistently confirm the consequences of personal bias in all forms of trading. Many firms make these mistakes without even realizing that their hedging programs are unintentionally complicated or are actually a form of speculation rather than hedging. In addition, these errors commonly cause hedging programs to underperform, or worse, fail.

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