Oil Futures for 2017 Sink as Mexico Hedges Output: Chart

Making Sense of the Oil Markets

Oil for delivery in December 2017 fell by more than $7 a barrel in June and July just as Mexico was implementing most of its annual oil hedge, which in the past has roiled markets. In previous years, Mexico has bought put options worth about 200 million barrels from banks, which in turn often sell futures for the following year, in this case 2017, to cover themselves. Mexico’s Finance Minister Luis Videgaray said Tuesday the country started hedging in mid-June, confirming an earlier Bloomberg story.

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