The current disparity between spot gas prices and those on the Nymex strip would appear to make financial hedges a rather unappealing prospect for gas buyers, such as local distribution companies (LDCs). However, hedging isn’t an arbitrage play for LDCs, but rather a means to price risk management. While it might not spare a buck it’s really intended to avoid a surprise.
Disparity
Articles from Disparity
Mixed Pricing Favors Downside; Northeast Dives
With a few instances of flat to modestly higher numbers sprinkled here and there, most of the cash market recorded small losses Friday in a muted reversal of the advances that had thoroughly dominated trading earlier last week. A large majority of the drops were in single digits. Northeast citygates, having much greater heights from which to fall, tended to see all of the larger declines ranging from a little more than a dime to as much as $1.30 or so.
February 28, 2005
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