Subscribe

Your email:

Complimentary Downloads


An Introduction to Fuel Hedging

Natural Gas Hedging for End-Users

Oil & Gas Producer Hedging
& Marketing Survey

2014 Oil & Gas Producer Hedging & Marketing Survey:Participate Today >

The Mercatus Energy Pipeline

Current Articles | RSS Feed RSS Feed

April 2014 Oil & Gas Hedging Update

 

Since our last update, forward prices for the crude oil and refined product forward are all trading lower, led by LLS (Light Louisiana Sweet) crude oil, which has declined by 3.30% since last month. For the fourth month in a row the Brent-WTI one year forward spread has continued to narrow, declining $0.54/BBL to $8.68/BBL. On average, the crude oil and refined product forward curves have declined by an average of 2.08% since our last month.

Bunker Fuel Hedging with Crude Oil Options & Crack Spread Swaps

 

As many participants in the bunker fuel market are constantly seeking better strategies to hedge their exposure to fuel price risk, we wanted to explore a hedging strategy which we don't see utilized regularly but could be a great strategy for many companies. While this strategy may seem complex, it's really quite simple if you break it down into two separate components, an option on WTI or Brent crude oil and a USGC fuel oil crack spread.

Electricity Marketer Goes Belly Up Due to Hedging Problems

 

What happens when an electricity marketer sells their customers fixed price power but doesn't properly hedge their exposure and prices increase significantly? More often than not, the marketer blows up and is forced to turn off the lights indefinitely. This appears to be what recently occurred in the case of, Clean Currents, a Maryland based power marketing company.

2014 Energy Hedging & Trading Courses & Events

 

Due to the continued popularity of our recent seminars and conferences, today we are pleased to announce numerous, upcoming events that we will be hosting in 2014.

March 2014 Oil & Gas Hedging Update

 

Since our February update, forward prices for the primary crude oil and refined product forward indices are all trading at higher levels, led by WTI crude oil which has increased 5.8% or $5.33/BBL over the past month.  For the third month in a row the Brent-WTI one year forward spread has continued to narrow, declining $2.19/BBL to $9.22/BBL. On average, the crude oil and refined product forward curves have increased by an average of 2.78% since our last update.

February 2014 Oil & Gas Hedging Update

 

While our monthly updates generally focus on forward prices we thought we'd take a brief moment to address the recent, significant moves in NYMEX natural gas futures as well spot propane prices in the US, which have traded at unprecedented levels in recent weeks. If you don't follow NYMEX natural gas prices, the past month has provided volatility that makes or breaks trading careers. Case in point, over the course of the past month the prompt month natural gas futures traded as low $3.953/MMBtu and as high as $5.72 before retreating to $4.721 on Friday. The volatility in many natural gas basis markets has been even more extreme. So what's causing the volatility? In short, a combination of prolonged, cold weather and a lack of adequate infrastructure. See Natural Gas Trading at Premium to Crude Oil for more on the recent moves in natural gas.

Natural Gas Trading at Premium to Crude Oil?

 

If you don't follow the US physical natural gas markets, you would probably be surprised to hear that spot prices in several regions are currently trading at price levels which could very easily be mistaken for crude oil. As a case in point, yesterday Transco Z6-NY (New York City) natural gas traded as high as $115/MMBtu, ending the day at an average of $91.264. As a comparison, prompt month NYMEX WTI and ICE Brent crude oil futures settled yesterday at $95.72 and $106.69, respectively.

2014 Energy Trading & Risk Management Conferences

 

Due to the continued popularity of our energy hedging and risk management seminars, we will be hosting an additional seminar April 22-23 in Houston. As seats for this seminar are limited, we recommend that you register as soon as possible. The seminar, which will appeal to energy consumers, marketers, producers and traders, as well as those in related businesses, will cover numerous aspects of hedging and risk management, from the basic fundamentals to various advanced strategies. During this seminar we will address hedging, risk management and trading of numerous energy commodities including crude oil, refined products (bunker fuel, diesel fuel, gasoline, jet fuel), natural gas and natural gas liquids (propane, ethane, butane, natural gasoline). You can register for the seminar via this link. An early registration discount is available thourgh February 19.  

When Should You Hedge Your Natural Gas Price Risk?

 

As energy hedging advisors, natural gas consumers, producers and marketers regularly ask us for advice regarding hedging their natural gas price risk. As such, many companies want to know how they can determine the best time to hedge their natural gas price risk. In short, there is rarely a "best" time to hedging natural gas prices. A successful natural gas hedging program doesn't require an ability to forecast where natural gas will be trading a week, month or year from now. In fact, most companies who believe they have the ability to accurately forecast commodity prices often have less than desirable hedging results. Why? When their price forecasts are incorrect, they simply aren't prepared to deal with reality. The vast majority of the time, hedging success isn't the result of accurate price forecasting, rather it's more often than not the result of proper analysis, planning, execution and optimization.

January 2014 Oil & Gas Hedging Update

 

Since our December update, forward prices for the core crude oil and refined product indices are all trading lower, led by ICE gasoil and NYMEX ULSD which are 3.43% and 3.05% lower, respectively.  Month-over-month, ICE Brent crude oil forward prices have declined by 2.88%, while NYMEX WTI forward prices are trading 0.52% lower. As a result of the larger decline in Brent forward prices, vs. WTI, the Brent-WTI one year forward spread has decreased by $2.63/BBL to $12.71/BBL. On average, the core crude oil and refined product forward curves have decreased by an average of 2.53% since our December update.

All Posts