Major energy traders including Gunvor Group Ltd. and Mercuria Energy Group Ltd. have reduced the size of their trading positions and increased borrowing from lenders to cover large margin calls stemming from the unprecedented surge in European gas prices, according to people familiar with the matter.
Commodity trading houses have been expanding their natural gas dealings in recent years, signing long-term contracts to purchase volumes of the fuel, and typically building corresponding short positions in derivatives to hedge potential losses from price swings. As the price of gas in Europe has spiked, the traders have been told to deposit additional funds -- known as margin calls -- with brokers and exchanges to cover part of the value of their positions in gas futures, the people said.
