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Storing up trouble

Utilities have become active hedgers against today’s high natural gas prices.In recent years, there has been a notable increase in both physical and financialhedging. Catherine Lacoursiere looks at whether storage is still a viable hedge

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With current natural gas prices hovering around $5 to $6 per million British thermal units (mmBtu), hedging has become an expensive business for utilities.

As price takers, they are having to be more creative to smooth out the effects of natural gas price volatility on their earnings. The typical defence against price spikes is injecting natural gas into storage for peak winter months –

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