Hedging
US power hedging suffers from low prices
Low power prices have dented the need for electricity producers and consumers to hedge with derivatives, while regulatory reform is also making life difficult for market-makers. But market participants are optimistic the trend could be reversed. Pauline…
US power traders expect rebound in hedging activity
Power hedging activity could increase with rising prices and greater regional variation across the US
Applied risk management series: Optimising commodity hedging programmes
The design and optimisation of a successful commodity hedging programme requires solid backtesting that meets the needs of different business functions. Using a recent case study, Carlos Blanco and Tamir Druz show how various tests can complement and…
Low Brent creates window of opportunity for hedgers, say analysts
Brent crude oil offers a window for airlines and refiners to lock in prices, but opportunity won’t last forever, say analysts
Financial transaction tax could raise energy company hedging costs
FTT will increase hedging costs for energy companies and deter them from trading with financial counterparties, firms say
Cutting edge: Hedging price and volumetric risks of fixed-price load-serving contracts in natural gas markets
In this article, Ning Zhang and Robert Cumbie propose a utility maximisation method for natural gas marketers to find optimal hedging strategies to deal with price and load uncertainty by using price and weather derivatives. Monte Carlo simulation…
The art of creating a corporate energy hedging programme
Risk managers and consultants say hedging corporate exposures to energy prices is more art than science. As a result, the development of a truly successful hedging programme requires several important questions to be carefully considered. Jay Maroo…
Energy Risk Europe: Austrian Airlines risk manager rails against hedging
Austrian Airlines risk manager argues fuel hedging delays firms' adaptation to higher costs and should be avoided
Uncleared margin rules threaten E&P hedging
Exploration and production companies can find it difficult to satisfy collateral demands when looking to hedge their output using derivatives. Now, Dodd-Frank threatens to make this even harder with margin requirements for uncleared trades. Alexander…
Natural gas producers step up hedging
Hedging by North American natural gas producers increases as prices rebound
Lack of critical mass in biomass
Growth in the use of biomass has led clearing houses to list derivatives referencing the organic fuel source, while some experimentation has also taken place within the over-the-counter markets. But these efforts are yet to yield substantial success. Jay…
Energy Risk interview: Bharat Petroleum's hedging programme
RK Mehra, executive director (international trade) at Bharat Petroleum Corporation Limited, talks to Jay Maroo about his company’s commodity hedging programme, corporate hedging in India and the likely effect of any regulatory changes
Outlook for commodity trading in Asia
Commodities trading in Asia has grown significantly with corporates looking eastwards for new opportunities and growth. But an uncertain global climate and regulatory differences provide challenges. Gillian Carr reports
Commodity hedging's PR dilemma
Media coverage of hedging is often flawed, distorted or downright wrong, and companies face huge challenges in managing public perceptions of their hedge programmes, Alexander Osipovich finds
Outlook for corporate hedging as banks pull back from energy markets
Will corporate hedgers suffer if more banks pull back from energy and commodities trading? Pauline McCallion examines the issue of dealer retrenchment from the market
Advert raises questions about US Airways' stance on fuel hedging
US Airways, which has stood out from the rest of the airline industry in recent years because of its refusal to hedge fuel costs, wants to hire someone to run a fuel hedging programme. The airline denies that it is reversing its stance on fuel hedging,…
Airline hedging falling short of best practices
Fuel hedging programmes at many airlines fall short of best practices, according to a new industry survey. Alexander Osipovich finds out how they are going awry
Analysts still sceptical of Delta Air Lines refinery acquisition
This week, Delta Air Lines confirmed rumours that it was purchasing a refinery on the US east coast, a first-of-its-kind transaction. As details of the deal have emerged, some observers have warmed up to the idea that Delta can better manage its fuel…
Risk management strategy low priority for many European energy buyers: survey
Most respondents think oil prices will rise – but few have risk management policies in place to cope with it
Possible Delta Air Lines refinery acquisition raises eyebrows
Analysts have been stunned by reports that Delta Air Lines is considering the purchase of an idled ConocoPhillips refinery on the US east coast. The unprecedented deal would provide Delta with an in-house source of jet fuel, but the problems inherent in…
Corporate hedging strategies affected by banking regulations: survey
Despite ‘end-user’ exemptions, strengthened banking regulations are likely to impact energy corporates due to their reliance on banks and other financial firms to manage hedging programmes, says a survey by Greenwich Associates
Low US natural gas prices stir hedging talk
As the boom in North American shale gas production continues to feed an oversupplied market, US natural gas prices sank to 10-year lows last week. Gas consumers are taking a serious look at seizing the opportunity to lock in prices — but remain hesitant…
Seeking opportunities in coal trading
Coal prices are expected to have better support this year than last, but trading opportunities will lie in relative-value strategies, say market experts. Jay Maroo reports
Refiners step up hedging activity
Refineries in Europe have stepped up their hedging activity in recent months as they take advantage of a recovery in margins, market participants say