Market risk
A good bet for 2005
2005 is forecast to be a tough year for many hedge funds, but the saturation of some of their traditional markets could prove a boon to the energy sector, finds Stella Farrington
Correlation: the horror!
The murky world of correlation, with its many pitfalls, represents a black hole in the minds of some energy market professionals. But, says Neil Palmer , you needn’t be afraid of the dark
Smoke without fire
The market for US financial coal swaps may be starting to show a little potential, but some major obstacles still remain before it catches alight – not least a widely accepted price index. By Joe Marsh
The basics of basis
Basis plays an important role for trading in the very complex US natural gas markets: spot will differ from the benchmark Henry Hub New York Mercantile Exchange price on the same day. Eric Fishhaut describes how the basis works and demonstrates the…
Crude imitation
Hedging Canadian heavy crude oil is difficult: unlike Canadian light crude, ithas no closely matching price benchmarks. Trading basis differentials is onesolution, but help may be at hand from another quarter. By JoeMarsh
Evolution expands gas and power desk
US broker Evolution Markets has hired two brokers for the North American natural gas and power desk it launched in October. Corey Geraghty and Trenton Davis now broker gas and electricity options from the company headquarters in White Plains, New York.
TriOptima trims six companies' oil swap portfolios
TriOptima, a Swedish company dedicated to reducing over-the-counter swap portfolios, has expanded its service into energy. The company has terminated its first group of multilateral OTC oil derivative swaps, with six companies eliminating unnecessary…
IPE launches UK electricity baseload index
The International Petroleum Exchange (IPE) has launched a UK electricity baseload index in response, it said, to industry demand for a viable index on which to base physical deals. The first pricing period will be for the March 2005 contract.
BofA reports improved commodity-trading income
North Carolina-based Bank of America yesterday reported revenues of $45 million from commodity trading in its full-year 2004 results, up from a loss of $45 million for 2003. The investment bank's recovery came amid strong overall financial results for…
Risk Management Inc signs four utility clients
Risk Management Inc (RMI), a Chicago-based energy consultancy and brokerage, has signed up four new utility customers for its energy risk management and hedging services. The City of Glendale Water & Power and Pasadena Water & Power, both in California,…
Double exposure
Continuing our series on applications of Monte Carlo simulation to applied problems in energy risk management, Les Clewlow , Chris Strickland , Oleg Zakharov, and Scott Browne look at potential future exposure and the analogous measure of expected credit…
Caught short
Given the difficulty China Aviation Oil is having closing its remaining illiquid positions, its derivative trading losses may be greater than first thought. James Ockenden and Stella Farrington report
Sovereign solutions
As we saw last month, most governments prefer stabilisation funds over hedging to protect against oil price risks. But multilateral institutions such as the World Bank advise otherwise. By Maria Kielmas
A hard nut to crack
This year has proved profitable for US oil refiners, but it could have been even better, had they not posted losses from forward product sales. Are refining companies learning from their trading mistakes? Joe Marsh reports
Blending the rules
The speed of decline of North Sea crude raises fresh concerns over the suitability of the North Sea as a benchmark, and to worries over the value of long-dated derivatives contracts. By Stella Farrington
Bridging the gas gap
Volatility in the natural gas markets shows no sign of any let-up, which means that managing basis risk at Henry Hub continues to spur demand for increasingly innovative derivatives products. Catherine Lacoursiere reports
Pay as you go
It is going to be a hard day at the office for Joe Risk Manager. The risk management committee might welcome his new risk charge system, but how would the traders take it? By Brett Humphreys and David Shimko
Fitch to buy Algorithmics
Fitch Group, parent of credit rating agency Fitch Ratings, is to acquire New York-based risk management software provider Algorithmics. The purchase, valued at $175 million, is expected to close in January, said Fitch today.
Oil price falls despite Opec cut
Oil prices fell Friday afternoon despite a decision by the Organisation of Petroleum Exporting Countries (Opec) to rein in current oversupply, effectively taking 1 million barrels a day off the market.
European Commission blocks acquisition of Gás de Portugal
The European Commission has blocked the joint acquisition of Gás de Portugal (GDP), the country’s incumbent gas company, by Energias de Portugal (EDP) and Italian energy company Eni, because it would impede competition.
China Aviation Oil ceases oil derivatives trading
China Aviation Oil (Singapore) Corp has ceased all oil derivative trading activities after announcing a $550 million trading loss and seeking court protection from creditors last week, the company said late Wednesday.
Duke to settle California power crisis allegations
US power company Duke Energy and some of its subsidiaries will pay $207.5 million to settle allegations that it acted improperly during the California power crisis in 2000/2001. The US Federal Energy Regulatory Commission (Ferc) approved the settlement…
China Aviation Oil chief arrested
Chen Jiulin, the suspended chief executive of China Aviation Oil, has been arrested on his return to Singapore early Wednesday as investigations begin into the company’s huge trading losses.
CMS Energy to sell $200m of convertible senior notes
CMS Energy intends to offer for sale $200 million of convertible senior notes due on December 1, 2024, but would not reveal the rate of interest they will pay.