World Bunkering > News > Industry News > Global sees hedging volumes soar

Hedging solutions provider Global Risk Management says it has seen an 32% increase in hedging.

While not revealing actual figure “for competitive reasons”  the company’s executive sales director Jan Knudsen says: “The increase we have seen in Q2 2010 compared to same quarter last year is primarily driven by increase in volumes with oil suppliers.”

“We have traded with oil suppliers for many years, but recently we have experienced an increasing number of oil suppliers wishing to manage oil price fluctuations,” Mr Knudsen continues.  He explains that the typical risk that oil suppliers are facing is the time difference between buying a cargo and selling the product again in the bunker market. The longer the time it takes to sell the storage - the greater risk of falling prices.

“Fortunately,” he says, “there is a way to address this matter – fuel price risk management - also known as hedging.”  

He adds: “Through our experience we have learned that suppliers operate in very different ways and require unique solutions in order to mitigate the risks in their operation. We have specialised in offering customised solutions. For example we offer broken dates instead of only full months. We work with the supplier to determine which solution matches his specific needs whether that would be selling the full month average of a certain Platts quote or the purchase of just three specific dates”.  

Global’s oil risk manager Morten Groenbech Terp, says: “We are aware that nothing is static in the oil business and will work with the supplier to change the hedge should it happen that different circumstances affect the sale of the products and thus creates a mismatch between the hedge and the operational business. Especially the customised tools such as Swaps with broken dates are popular at the moment. Suppliers are learning to turn volatility into opportunity”.