Hedging fuel prices - major Oil Hedge company goes bankrupt
Thread Starter
Hedging fuel prices - major Oil Hedge company goes bankrupt
It's all very well hedging your future fuel purchases at a fixed price, but if the company you hedge with goes bankrupt you are back where you started. Or worse.
FT.com / Home UK / UK - Oil trading company files for bankruptcy
any impact on airlines ?
FT.com / Home UK / UK - Oil trading company files for bankruptcy
any impact on airlines ?
FX Guru
Join Date: Feb 2001
Location: Greenwich
Age: 67
Posts: 900
Likes: 0
Received 0 Likes
on
0 Posts
No.
The company was shorting oil on NYMEX as it rose. Finally the margin calls became too much for it and it filed for Chapter 11.
Anyone that traded with it via NYMEX will have the position taken up by the exchange.
The company was shorting oil on NYMEX as it rose. Finally the margin calls became too much for it and it filed for Chapter 11.
Anyone that traded with it via NYMEX will have the position taken up by the exchange.
Warning Toxic!
Disgusted of Tunbridge
Disgusted of Tunbridge
Join Date: Jan 2005
Location: Hampshire, UK
Posts: 4,011
Likes: 0
Received 0 Likes
on
0 Posts
I thought companies hedged direct with oil companies, not with faceless suites of offices in a Texas skyscraper that will promptly go 'into administration' when the punt they were taking goes bad! Oh dear! So they are on a one way bet? Take the profit if the hedge goes well, or roll over if it goes bad- either way they don't pay out! Kinda makes the whole hedging thing look a bit silly, doesn't it?
Thread Starter
FX Guru
Join Date: Feb 2001
Location: Greenwich
Age: 67
Posts: 900
Likes: 0
Received 0 Likes
on
0 Posts
I'll clarify my earlier answer.
I don't think you'll find that the airlines were dealing with this company. It's a physical oil trader. Other oil companies traded with it, not airlines. It deals (note the present tense) with oil and natural gas gathering, transport and storage. The biggest creditors are other oil firms, Husky in Canada is one.
SemGroup say they're going to flog off a lot of assets (which are worth over $6 billion). This is the important thing about Chapter 11, it allows companies time to reorganise whilst protected from creditors. As you'll know from airlines, Chapter 11 means that a (slimmed) phoenix can arise from the ashes.
Rainboe - Gotta head north a bit mate, they're based in Tulsa! 
I don't think you'll find that the airlines were dealing with this company. It's a physical oil trader. Other oil companies traded with it, not airlines. It deals (note the present tense) with oil and natural gas gathering, transport and storage. The biggest creditors are other oil firms, Husky in Canada is one.
SemGroup say they're going to flog off a lot of assets (which are worth over $6 billion). This is the important thing about Chapter 11, it allows companies time to reorganise whilst protected from creditors. As you'll know from airlines, Chapter 11 means that a (slimmed) phoenix can arise from the ashes.
with faceless suites of offices in a Texas skyscraper
It may not directly or immediately affect particular customers but there are always unforeseen consequences with this sort of finance. A reduction in the availability and increase in cost of hedging for instance. Another brick in the wall.
Cleverly disguised as a responsible adult
Join Date: May 2007
Location: On the western edge of The Moor
Age: 67
Posts: 1,100
Likes: 0
Received 0 Likes
on
0 Posts
Seems to me though that airlines would tend only to worry about aviation fuel prices and no be bothered hedging oil prices. I'm sure they have no use for crude oil!!
Join Date: May 2006
Location: 2 m South of Radstock VRP
Posts: 2,042
Likes: 0
Received 0 Likes
on
0 Posts
Its collapse came as oil prices plunged to their lowest levels since early June.
It's always sad when hard working speculators get their a**es burned.
Last edited by GOLF_BRAVO_ZULU; 24th Jul 2008 at 07:01. Reason: Did I say speculators? I'm sure I meant investors.
Join Date: Mar 2008
Location: Mumbai
Posts: 26
Likes: 0
Received 0 Likes
on
0 Posts
I am sad that the 'hard working' speculators have only got their as** burned as of now.
I wanna see these guys lose the shirt off their backs. Speculation is the most wasteful and non productive ways of making a buck. Good that these guys lose.
I wanna see these guys lose the shirt off their backs. Speculation is the most wasteful and non productive ways of making a buck. Good that these guys lose.
