Oil rout roils E&P and airline hedging strategies

Price dive rewards producers with cautious risk management practices

Oil rig
Many hedging programmes did not anticipate huge oil price plunge

It may be a distant memory now, but for nearly four years, peace and quiet reigned in the oil market. From 2011 up until September of last year, benchmark North Sea Brent crude oil hovered in a price range of roughly $100 per barrel (/bbl) to $120/bbl. Bank commodity desks complained that hedging activity was sluggish, as exploration and production (E&P) firms and other clients were lulled into complacency by a range-bound market. Hedge funds suffered from a lack of trading opportunities, and so