Mexico may change its oil hedging policy
Mexico official opens door to going naked on oil hedge
Deputy minister said would inform public if hedge carried out
‘We're evaluating it,' deputy Gabriel Yorio tells press
Petroleumworld 08 22 2019
Mexico is evaluating locking in oil prices for next year and will inform the public “if we do it,” said Deputy Finance Minister Gabriel Yorio, who appeared to leave the door open to refraining from carrying out the world's largest oil hedge.
Mexico usually buys put options from a small group of investment banks, starting as early as May, in what's considered Wall Street's largest -- and most secretive -- annual oil deal.
This year, the country decided to change the hedging formula to reflect incoming regulations on fuel oil, and in July said it had concluded that process. Since then, it hasn't stated whether it's begun the hedge or not.
“We're evaluating it. And if we succeed at doing it, or if we do it, we'll communicate that at the end,” Yorio told reporters after he was confirmed as deputy minister by lawmakers Tuesday. Asked if Mexico has had difficulties with the hedge this year, he said that “it's a markets issue that I can't discuss right now.”
His conditional phrasing is a departure from past ministry officials, who usually communicate their desire to do so, especially this late in the year. It even represents a shift from then Finance Minister Carlos Urzua, who told Bloomberg in January that Mexico planned to hedge for 2020.
In 2018, the hedge had already begun by mid-year, in 2017 Mexico took its first steps to do so in June, and in 2016 it began in June. Prior to that, the usual hedging period had been late August to late September.
West Texas Intermediate crude for October delivery was up 0.5% to $56.40 a barrel at 10:59 a.m. on the New York Mercantile Exchange, after earlier advancing by as much as 1.8%.
Mexico has spent around $1 billion annually in recent years to hedge against fluctuations in prices to prevent an impact on government revenue. It has made money at least three times since buying put options almost every year starting in 2001. That included a record payout of $6.4 billion in 2015 after oil prices crashed.
Story by Nacha Cattan from Bloomberg.
bloomberg.com / 08 21 2019
We invite you to join us as a sponsor.Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.
Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.
Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.
Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!
We invite all our readers to share with us
their views and comments about this article.
Write to email@example.com
By using this link, you agree to allow PW
to publish your comments on our letters page.
Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels