Hedging Practices

Barron's, the American weekly magazine published by Dow Jones & Company, has a great article titled "Oil Prices Are Soaring. It's Time to Hedge or Sell" and it has some good advice:

"For traders, he recommends buying what he calls "cheap" put options, which would protect gains on long positions or profit from future declines. Most readers aren't futures traders, but for those who have participated in advance in energy-related stocks, he also agrees with the suggestion of selling call options against their positions to earn extra premium income"

Full article is here (or behind the paywall here)

ADX Energy, Australian-based Europe-focussed energy producer, has announced its hedging strategy for its Vienna basin fields on 10-Jan-2022

Specifically it has executed hedging transactions with BP for a zero collar contract with a pricing floor at USD 73.00 per barrel (put option strike price) and a cap at USD 82.60 per barrel (call option strike price). Period is for January to April 2022. More details in this PDF and news story

For advice on effective hedging strategies similar to how ADX is doing, subscribe for a free trial of our daily flagship report: Middle East Oil Hedge Report

News organizations are reporting on how Bulb Energy, the UK energy supplier, dropped into administration because it was unable to hedge effectively against surging wholesale energy prices.

Since then, the UK regulator Ofgem has announced it is introducing new measures to ensure suppliers hedge properly, the City AM is reporting. (as well as FT and Bloomberg behind paywalls)

For effective hedging strategies in oil and gas trading, subscribe for a free trial of our daily flagship report: Middle East Oil Hedge Report

We are reading NYSE-listed Crescent Energy's nine-months reports of operation and fascinated by how they are utilizing hedging strategies to minimize their risks.

Specifically they are mentioning in detail how they have "reduced risk via balance sheet strength and a consistent commodity hedging program". Their full report is here.

For effective hedging strategies similar to what Crescent Energy is doing, subscribe for a free trial of our daily flagship report: Middle East Oil Hedge Report

Hedging is not easy. Occidental Petroleum, NYSE-listed oil & gas company, has reported it has lost an estimated $339 million from its oil and gas hedges in 2021 through Sept. 30

Now Bloomberg is reporting that Occidental will all but end hedging next year due to the run-up in oil and gas prices.

For effective hedging strategies in oil and gas trading, subscribe for a free trial of our daily flagship report: Middle East Oil Hedge Report

What is more accurate? Futures oil prices or top analyst forecasts? We now have an answer; as accurate as all academic answers.

Journal of Futures Markets, a monthly peer-reviewed academic journal, has published a research article titled "Oil price analysts' forecasts". They have conducted a survey to compare analysts' forecasting ability to futures contracts and also among analysts themselves. Their findings: futures prices supersede analyst forecasts. (Sorry analysts!)

Full research article follows.

(At our daily flagship report, Middle East Oil Hedge Report, we review and analyze future prices for petroleum industry players. Subscribe for a free trial.)