Mexico hedges oil at $49 a barrel
Mexico has paid $1bn to insure against a further fall in oil prices, locking in a much lower price for its crude sales than in years past as big exporters battle for market share.
The finance ministry said late on Wednesday that the government had hedged the price of 212m barrels of oil to be sold in 2016 at $49 a barrel. The government typically pays Wall Street banks for put options that give it the right to sell crude above a specified level, helping cement a federal budget that is heavily reliant on oil revenue.Mexico hedges oil at $49 a barrel
Next year’s strike price is 36 per cent below the $76.40 a barrel at which Mexico had locked in sales in 2015, highlighting how the prolonged global slide in oil is hurting producers as their previous hedges expire. The heavy, sour Mexican crude grade known as Maya this week was about $38 a barrel.
Mexico’s annual hedging programme, among the largest of its kind in commodity markets, typically begins in the third quarter of each year. The government said this year’s programme began on June 9 and ended last Friday, an unusually early schedule. The Financial Times in June reported the appearance of large options deals that bore Mexico’s stamp....MORE
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