Oil Volatility Cost Producers Hundreds Of Millions In Bad/Unusual Hedges
April 25, 2020 at 18:19 PM EDT
I’m about to open a small window into the arcane world of oil producers’ hedging. Oil producers routinely write way out-of-the-money hedges and pocket a small premium on a situation they know will never happen – like oil under $20/b or $10/b.