RE:RE:Hedge Funds pushing down Oil PriceIts fine to complain about it but what you gonna do about it?
The thing to do is obvious: hedge.
You're trying to maximize how much you get for your products, and protect your downside too.
Obviously if you're only dealing in the physical market, and the paper market has a major influence on price, you're going to be left holding the bag at times (like me and my Kelt shares).
Paper market is a perfect vehicle for a producer to protect their cashflow and make additional $$$ over and above the physical market.
Because its becoming increasingly clear that the paper market causes prices to fluctuate more than they should based on actual supply and demand so be smart: when prices are high, sell your production on the paper market. When prices drop, buy your position back.
That's why when oil was $83 I was posting that Kelt should hedge 25% (they didn't). The run up didn't seem justified, it seemed likely that going into an election and interest rate decisions that there was incentive/pressure for oil/gasoline prices to come down. Plus it protected the cashflow in case of a precipitious drop. A CFO to me has 2 roles in addition to their regular ones: seize opportunities. And be paranoid. That's what hedging @$83 WTI was.
Pablo the bagholder