Published On: Sat, Sep 3rd, 2016

Shell becomes the first foreign oil company to join Mexico’s coverage program

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Royal Dutch Shell participated in Mexico’s oil hedging program for 2017, the first time an oil company has taken part in the world’s large commodities hedging program, according to Bloomberg, citing four people with knowledge of the matter.

Shell’s trading unit was one of the seven counterparties to the Mexican government, the report said, adding that their involvement is the first known participation since Mexico started to lock in prices regularly 15 years ago.

The move highlights a retreat by banks away from commodity trading because of increased regulation following the financial crisis.

Earlier this week, Mexico’s Finances Secretariat said it had wrapped up its derivatives trade program, guaranteeing an average price of $42 per barrel for crude oil exports in 2017.

Due to the government’s dependence on oil income, Mexico hedges its crude every year and the deals are closely watched by the market since the trades are big enough to affect prices.

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Photo: xbhp.com

by CATHERINE NGAI for thenews.mx

Source: http://www.thenews.mx/

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