Mexico Hedges 2017 oil at $42… WSJ – Commodity Research Group

August 30, 2016 by Jim Colburn Leave a Comment

The article suggests that Mexico’s oil price will be covered at $38:

“The ministry said the government spent $1.03 billion on put options that cover 250 million barrels of oil at the equivalent of $38 a barrel for Mexican crude, through 46 transactions in the global derivatives market with seven counterparts.”

“The Finance Ministry said the budget proposal to be submitted next month to Congress will include an oil price estimate of $42 a barrel. The $4 per barrel difference between that and the hedges will be made up using money in a budget-stabilization fund, from which around $1 billion was set aside for the purpose.”

“The budget-stabilization fund is also used to pay for the put options, which this year were contracted between May 13 and Aug. 25.”

Here is the WSJ article: http://www.wsj.com/articles/mexico-covers-2017-oil-revenue-at-42-a-barrel-1472486222

Commodity Research Group (CRG), founded by veteran analyst Edward Meir, is an independent research consultancy specializing in base and precious metals, as well energy products. The Group provides research and general price analysis for these markets, along with advice to companies seeking to construct commodity hedging strategies.

Our associates bring decades of experience to the table, as they seek to help our clients understand the markets. CRG will distill the myriad of pricing variables mentioned above into coherent research that is to-the-point and tailored to a clients hedging or pricing needs. In addition, CRG is available for consulting assignments and speaking engagements. CRG does not manage money or trade for itself.

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