A GUIDE TO ENERGY HEDGING - Commodity, …

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A GUIDE TO ENERGY HEDGING . 1. Other Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38. Basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38. Example 12 Effect of Basis on a Fuel Dealer's Hedge . . . . . . . . . . . . . . . . . . . .41. Exchange of Futures for Physicals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42. Mechanics of an EFP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43. Example 13 Use of an EFP to Initiate a Position . . . . . . . . . . . . . . . . . . . . . . . .44. Example 14 Use of an EFP to Liquidate a Position . . . . . . . . . . . . . . . . . . . . . .44. Blind vs. Selective Hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46. Technical Analysis.

3 3 S ignificant, sometimes abrupt, changes in supply, demand, and pricing have touched many of the world’s commodity markets during the past 25 years, especially those for

  Energy