Hedging, Russian Rouble, Yen, Euro, oil and the SaudisWho gets hurt the most with this oil price slide, is it Russia? Reports are that a number of American companies are hedged into 2016 at close to $90.00 a barrel. With the collapse that we’ve seen in oil it is a no brainer that some of those companies will have sold their hedged position at these current prices (going to cash) to be able to go long at the opportune time. Of course the other alternative is to let those hedges run full term, but the old saying, “that a bird in the hand is worth 2 in the bush” may just hold sway. Either way, those American companies that have hedged hold a big advantage over the likes of Russian companies et al that probably haven’t accessed the hedging market through plain lack of depth or in Russia’s case sanctions that may have prevented them from doing so. Not all North American companies hedge and few, if any, would hedge all of their production and so we will still see a reduction in the rig count in the face of this oil price downturn as we move forward. As of Dec 26th that count was 1499 oil rigs in service down from a high of 1609 on Oct 10th. That’s a reduction of 110 rigs in less than 3 months. Besides the declining rig count keep an eye on the Rouble. This AM it’s a tad under 60 to the U.S dollar. Last summer it was closer to 35 to the dollar. But look at the yen and the Euro. Both these currencies have dropped substanially which lessens the advantage of a falling oil price to Japan and Europe. I’m beginning to wonder if the Saudis really do know what they are doing. This move has the potential to destabilize a lot of countries.