Hedging
Ending Emir hedge exemption conflicts with Mifid II, firms say
EU energy firms warn Esma’s proposal to scrap the Emir hedge exemption would introduce a glaring inconsistency between Emir and Mifid II
E&P firms reluctant to hedge in wake of oil collapse
Having undergone a severe decline since late 2014, the price of crude oil has fallen still further in the past few months. That has made US shale producers reluctant to hedge for fear of locking in rock-bottom prices
Internal transfer price optimisation for integrated energy firms
By selecting appropriate levels for the internal transfer prices of commodities and risk, an energy company can influence the alignment of its overall risk-return profile with its strategic objectives. Here, Henrik Specht, Sergey Zykov, Tilman Huhne and…
Cutting Edge: Co-simulation of risk factors in power markets
In this article, Jialin Zhao and Sang Baum Kang propose a simple but realistic model to co-simulate the time series of three risk factors: temperature, electricity load and prices. In addition, the authors provide load-serving entities with a…
Newcomer of the year: Huntington Bank
Huntington Bank’s newly fledged commodity hedging desk has flourished amid the retreat of larger dealers
Risk manager of the year (utility): GDF Suez Trading
Internal and external clients have benefited from the utility’s risk management skills
Risk manager of the year (sovereign): Mexico’s Ministry of Finance and Public Credit
Oil hedging stabilises Mexican state finances amid price crash
Electricity house of the year: Citi
Bank continues to provide liquidity despite tough markets and extreme weather
US shale boom poses challenge to Henry Hub benchmark
Henry Hub, the US natural gas benchmark, is being called a "broken proxy" as the shale revolution boosts production in the northeast US. But potential alternatives, such as Pennsylvania's Dominion South, will find it difficult to seize Henry's crown
EU commodity position limits prove tricky to hammer out
EU regulators are working on plans to implement commodity derivatives position limits under Mifid II. But their latest proposals have been criticised by energy firms, which point to questions over issues such as hedging exemptions and where the limits…
Quant ideas: Building a better LNG forward curve
A robust suite of liquefied natural gas (LNG) forward curves is an important prerequisite for the proper valuation and risk measurement of LNG portfolios. This article provides an overview of effective methods for constructing long-term LNG forward price…
Oil rout roils E&P and airline hedging strategies
Corporate risk management programmes have had a mixed track record amid the recent plunge in crude prices. Oil producers with a conservative approach to hedging are emerging as some of the winners, while some airlines are feeling regretful about their…
Dodd-Frank reporting lets traders prey on hedgers
The US Dodd-Frank Act has foisted transparency on derivatives markets by requiring the public reporting of over-the-counter trades. But some end-users are crying foul, as the new rules cast a spotlight on the once-hidden execution of their hedging…
Hedging commodity exposure in international markets
An increasingly diverse set of market participants require agricultural price risk management tools that can not only match current needs but can also adapt to future market developments
Adapting to change in agricultural commodities markets
The continued evolution of commodity markets has necessitated the development of new risk management strategies and created demand for a more diverse pool of trading partners.
E&P firms restructure hedges amid oil price plunge
Oil exploration and production companies in North America are looking to restructure hedge positions that have become extremely valuable since the dramatic decline in crude oil prices during the second half of 2014
Fuel hedgers bemoan bank retrenchment from commodities
Delta Air Lines and World Fuel Services describe impact of Wall Street retreat from commodity markets at Energy Risk Summit USA
Applied risk management series: Active VAR management
In this article, Carlos Blanco introduces a set of tools to assist traders and risk managers in actively managing the value-at-risk of energy derivatives portfolios
Non-bank commodity traders seen as benefiting from Volcker rule
End-users will hedge more with firms such as BP, Shell and Vitol as banks face ban on prop trading, say market participants
Cutting edge: Valuation and optimal hedging of storage contracts in incomplete gas markets
In this paper, Magnus Wobben, Tilman Huhne, Yuri Ivanov and Sebastian Hanneken examine the impact of market incompleteness on the valuation of gas storage contracts. In contrast to prior research, their proposed valuation framework accounts for the…
Sovereigns look to hedge fuel imports after Morocco deal
More energy importing countries are in talks about hedging fuel purchases after Morocco’s sovereign hedging deal, say bankers
Liquidity seen as top concern for energy risk managers
Falling over-the-counter energy volumes in Europe and the US push liquidity to top of risk management agenda
Asia Corporate Energy Risk Manager of the Year: Etihad Airways
A conservative yet flexible jet fuel hedging programme has proven successful for Etihad
Oil producer hedging surges amid Middle East turmoil
Elevated WTI prices, pushed up by regional unrest, are creating opportunities for US oil producers to hedge