Risk Spectrum Has New Look

April2016_Spectrum

Price volatility is a concern that never goes away for energy marketers. Risk looks different in 2016 with oil prices recently dropping to 13-year lows and strong indications that inventory overhang will keep prices depressed in 2016. Another ever-present risk is weather, and that is front-of-mind after a very disappointing winter fueled by a record El Niño. World oil supply appears secure for the moment, but U.S. production is trending downwards, and the Middle East is wracked by violence. Prices took an unforeseen tumble in recent years, and no one knows which factors will emerge to reshape the markets in the months ahead – or where prices will be in six months.

Oil & Energy recently reached out to hedging providers who support the heating oil market for their thoughts about the current marketplace and the prospects for 2016. We’d like to thank the companies that took the time to participate: Global Companies, Hedge Solutions, Sprague Operating Resources, Angus Energy, Aletheia Consulting Group, Irving and Powerhouse.

Oil & Energy: Please evaluate the level of uncertainty in oil pricing for the balance of 2016.

Global: Oil, being a commodity, will always have volatility and uncertainty. That’s the nature of the beast. Even at these lower levels, dealers should maintain a manageable hedge against any forward volumes they intend to purchase for their business. Whether heating oil is $3 per gallon or $1 per gallon, risk is always present.

Hedge Solutions: Volatility will be the norm as always. There are simply too many variables that can impact oil prices. That said, barring any major geopolitical issues, prices should remain in the $50 and lower echelon.

Irving: In recent weeks and months we have seen just how uncertain the oil pricing can be. Fundamentally, the world’s supply of oil is ample. Current production levels are still higher than demand, and there have not been any serious expectations for that to change for the balance of 2016. The market is able to get in a rally mode with hedge funds and large speculative buyers entering the market. The buying can then snowball and technical traders get signals to buy, which in turn triggers additional automated buying. The result is what we have seen this year – a market that can climb on what might happen in the future, while at the same time quickly falling again on the fundamentals. Market uncertainty is today’s new normal. Every morning when you first look at what the market is doing you are simply looking at a point in time that can be totally different by the time you get into your office. I know many of us live this every day. As far as the balance of 2016 goes, the uncertainty grows with each day. As supply and demand start to get closer to being in balance, the uncertainty of what happens will still be with us. To give you an idea of the uncertainty for this year, you can look at the latest EIA Short-Term Energy Outlook (March) which shows just how uncertain the future of prices are. June is only three months away as I am writing this, and the forecast for WTI crude oil in June is $35. However, the range to be 95 percent certain of where the price will be in 3 months is from $24 to $58 – a range of $34. That points to a very uncertain price.

Powerhouse: Uncertainty has been the driving feature of oil pricing in recent years. The high level of price volatility reflected serious geopolitical challenges in the Mideast, Eastern Europe and Asia. Ironically, these challenges remain in place, but the availability of U.S. crude oil has materially lessened the bullish price impact of events overseas.

Low prices have been expected to reduce the availability of North American crude oil, but at the time of writing, this has not happened. In part this reflects improved technology that has made production much less expensive. It has become more accessible and can, if prices rise, be brought into production quickly, creating some resistance to higher prices.

Some analysts are calling for the overhang of crude oil inventories to clear by the end of 2016. Perhaps, but there is a problem on the demand side as well, especially in distillate fuel oils.

Sprague: Given the many variables (world supply/demand dynamics, political unrest, global economies, weather, etc.), it is difficult to imagine oil pricing without some level of price uncertainty. However, from a strictly fundamental perspective, it feels as though we are entering a period of relative price stability. U.S. inventories are at record levels, China’s demand has weakened, and OPEC countries seem intent on maintaining world market share at almost any price. Barring a significant geopolitical event, it seems unlikely that the price of WTI would exceed $55/bbl in the near term. Thus, we’ll likely see a $30 to $55/bbl range overall for 2016 – readers can decide whether or not that range constitutes price uncertainty.

Aletheia: With refiners going into maintenance and supply more prevalent than demand, it looks like pricing will be sideways to lower. If production can be substantially reduced then perhaps we will see some stabilization in the price (that is a big if, because Iranian, Iraqi, Russian and Saudi barrels will be competing for market share). Since there is plenty of supply domestically in the U.S., any production coming out of the Middle East is going to try to find buyers in Asia. Keep an eye on how well the Asian economy is doing, as this will be a key factor in determining as to whether or not prices will start to move up.

Angus: If you want to measure uncertainty by assessing the activity of the professionals who trade in the oil markets, the answer would be “very high”. The “volatility” of prices, though not a directional predictor, is not currently showing any signs that prices are going to simply fall into a small trading range.

Oil & Energy: What do you see as the most significant risk factors for heating oil prices for 2016?

Hedge Solutions: Assuming we’re talking about factors that could spike prices (since lower prices are favorable for this industry), the usual culprits apply: geopolitical dynamics (Middle East and West Africa politics, Latin America economics), and weather (think Hurricane Season). U.S. shale production will be monitored and remain a headliner for the near future as traders look to predict output trends. All of these will have an influence on price.

Irving: I see the most significant risk factors for heating oil prices this year are:

  • The price of crude oil is almost always the biggest factor, as higher crude oil prices mean higher heating oil prices.
  • Another top factor is investors’ perceptions of what the supply and demand situation will be in the future. The prices often climb more on perception than on the reality of supply. The fear of what could happen keeps the buyers in the market and many speculative investors tend to buy oil futures, not sell them, when they invest.
  • The world’s economic situation: Is demand for oil going to increase, and will countries add more stimulus money that will drive higher demand or increase the perception that demand is going to increase?
  • OPEC – the same question that has been around for the past few years – will they do anything to curtail production levels? Every time OPEC mentions the possibility of affecting production levels the hedge funds and large speculative buyers drive prices higher. At the same time, if OPEC talks about increasing production they can have everyone selling, driving prices lower.
  • Something we have avoided the last few years is any significant disruption to delivery of supply. The U.S. is currently well supplied but there is always a risk that supply is not able to be delivered where and when it is needed. If supply gets short in an area – the prices tend to climb rapidly.

Powerhouse: There are risks on both sides of the ledger. A slowdown in the economy could impact demand bearishly. Weather, of course, will impact prices either way. The El Niño winter is over, but effects of changing climate are unclear. This is why the dealer needs to secure customers with fixed or capped prices supported by hedging.

Sprague: As we saw during the 2015-16 heating season, the answer is as it has always been – weather. Underlying market prices will rise and fall on a number of factors, but the true price risk for home heating oil is ultimately determined by weather. Let’s look at the 2015/2016 season as an example. We all witnessed the overall energy price collapse. In the span of about 18 months, WTI fell from the $100/bbl level to sub-$30/bbl. Everyone enjoyed watching gasoline pump prices fall. Obviously, home heating oil prices fell as well. But looking even a bit closer at physical heating oil prices, we can see that despite the dramatic drop in overall energy prices, the record warm winter has kept physical home heating oil prices at a discount all season long. Even in spring when you might normally expect physical home heating oil prices to trade at a premium to the market price, it is currently still trading at a significant discount. Why? Because the heating oil piece of the distillate pool is now strictly limited to space heating use. Without cold weather it has nowhere else to go. Diesel demand on the other hand, is driven by a wider variety of factors like the overall health of the economy and agricultural demand. So, while energy prices were cheap overall, heating oil prices were even cheaper, a direct result of the weather.

Aletheia: One of the most significant risks is volatility. The knee-jerk reaction in the market creates many problems when trying to purchase oil short term as well as long term. It is vital not to become complacent when locking in online barrels. Just because the market is down doesn’t necessarily mean it is a good time to buy. The old eBay mentality has to be restrained. If not properly hedged you can lose significant margin by hitting the buy button too frequently. Another risk factor would be complacency. Prices might not stay this low for long, so you need to set pricing levels that if breached you will execute a trade or purchase physical supply.

Angus: Uncertainty of what the true drivers are in the marketplace. One day it is the Saudis, the next day it is the Frackers. Then, it is the Chinese economy and the next it is ISIS. The biggest risk (to prices rising – which is bad for our retail marketplace) is likely more in the long-term impact of shutting in producing wells in the U.S., coupled with the growing global economic uncertainty.

Global: Over-purchasing gallons with no hedge for next season. Dealers will be tempted, with prices this low, to buy more forward contracts than they actually need, trying to hit a home run and make additional money. This could end up being business suicide if the market moves lower and dealers are stuck with higher priced forwards unhedged.

Oil & Energy: Today’s heating oil prices appear extremely low. Is there still a need for dealers and/or customers to maintain downside protection in this pricing environment?

Irving: The answer is not always a straight across the board answer for all. Each dealer has their own unique customer base with different needs. The price is low compared to recent years, but I want to point out that many thought it was pretty low last year at the start of the buying for this season. In fact one of last year’s hedging questions started – Can dealers leverage current low pricing…? At that time the market was trading around 70 cents higher than it is today. Of course it came down later in the year, and this winter the prices have been much lower than most anticipated. When deciding about downside protection, dealers have to consider at what price level they are selling and how far does the market have to drop before it will significantly put their business in danger. The volume of business is also a significant factor in determining the risk of loss if the market does drop lower. I see the market prices low enough that if a forward book is handled correctly, there would not really be a good value in purchasing downside protection. There again, it is also a dealer’s risk tolerance that helps to dictate the need for protection. Customers should also think twice about spending money for downside protection at current levels as the probability that prices will be much lower is very small. The current price of heating oil does not leave room for it to realistically drop $1 like it can when oil is trading over $2.

Powerhouse: There is no limit to the level to which oil prices could go. Poor demand or excess supply could easily move prices lower. (In Edmonton, Canada this winter, propane actually posted negative prices.) Dealers that do not hedge are at risk.

Sprague: There is always a need to match what you’re buying with what you’re selling. If retailers are selling downside protection to homeowners, they should be covering themselves accordingly. Anything short of that is introducing an unnecessary element of risk. That said, it would be inaccurate to say there isn’t less “downside risk” than there was 18 months or even a year ago. Energy prices won’t go to zero, so there is a downside limit. There is no upside limit.

Aletheia: In 1999, a year after I got my start in the wholesale business, the price of heating oil reached .2952. Although prices look as if they have bottomed out, history has shown us otherwise. If the cost of the hedge is covered by the fee, then it would be wise to purchase downside protection. The good news is that since the underlying price is so low, compared to what we have been accustomed to in recent memory, the cost to hedge is less expensive.

Angus: It depends. Who determined that they “appear” extremely low? They are much lower than they were in the last few years, but the same thing could have been said for $2.50 per gallon, $2.00 per gallon, and $1.50 per gallon. Zero is too low. Anything above that has risk. While assuming risk – in the form of not hedging, a/k/a speculating – is certainly one route that someone may choose to take, the real question needs to be asked as to whether you (the dealer) are using the markets to help manage your profit margins, or as a speculative tool.

Global: True, the price of oil has dropped significantly over the past 18 months, but it still has the potential to drop even further. You wouldn’t want to lock in gallons at current levels without some sort of hedge in case values fall further. A drop of another 30 cents isn’t impossible, and if you buy in with no hedge, that 30 cents will erode your margins.

Hedge Solutions: Yes, absolutely.

Oil & Energy: Weather was a huge problem in the winter of 2015-16. What sort of strategies provided the best protection?

Powerhouse: Holders of degree-day insurance were happy for the payout, especially during December. Buyers of contingent options that needed both higher price and warmer weather did not get cooperation from the market. There will inevitably be more interest in weather hedging this year because it would have worked last year. But keep in mind, there is a low correlation between weather and price.

Sprague: It’s easy to be a Monday morning quarterback. In retrospect, the best strategy for the 2015-16 heating season would arguably have been to have had no commitments and kept good relations with all supply sources. Let’s face it: Even retailers that covered their programs responsibly were probably left with more contract oil than they needed as a result of the warm weather. The reality is that there are no strategies that protect against every possible scenario, and certainly not any that wouldn’t be cost-prohibitive. It’s easier to hit a home run if you know what pitch is coming. But we never do. Prepare accordingly.

Aletheia: Weather hedging was helpful protection for the 2015-2016 season. The only problem was if you delayed putting on the hedge before the El Niño forecast, then you saw your option premium go up substantially.

Angus: Less so “strategy” than simply hedging the risk. There are several weather hedges/trades that could have provided protection against the extreme warm season. As with any type of hedge, the “benefit” is generally in providing certainty. The flip side is that there is a cost to place that hedge. Had it been warm, all of those who “hedged” against the warm winter would have “lost” on that hedge. However – and from the hedging perspective this is the key – hedging is not meant to yield speculative profits. It is meant to shift risk elsewhere. Put options on the weather (HDD’s, specified by a local weather station) would have done the job this year. However, it should be noted that they would have done the job last (cold) year, as well! They wouldn’t have paid out, but the dealer would not have needed the payout.

Global: Weather was a huge problem in last year’s winter (2014-15) also. After a warm November and December, we got slammed with an extremely cold January and February, which wreaked havoc with logistics for dealers right up to and including wholesalers and majors. The point here is, in our business, weather is always going to be a problem. Best strategies for protecting margins are once again hedging correctly and not over-buying, tempting as that is. And purchasing supply from a reliable company with their own storage tanks such as Global Partners.

Hedge Solutions: It was a warm winter for sure. Basis (the delta between the rack and the Nymex price) narrowed considerably due to the availability of product and lack of demand. And of course the price came down considerably, so making sure you had the right blend of wet barrel commitments without overcommitting was critical to emerging from the heating season with your margins intact. We are always coaching clients about the importance of having the right “hedging equation” in place for any type of season, warm or cold, and the extremes of both.

Irving: In the heating oil business weather is always an issue. The past couple of years were colder than expected and this year much warmer than most dealers had planned for. One method a dealer can use to prepare for varying temperatures is to buy a percentage of what they are selling at fixed prices (maybe 80 percent to 90 percent) and then use options (out of the money for a lower cost) for the rest of their volume (10 percent to 20 percent). The cost of the options can be spread over all the fixed forward gallons sold. You will then be protected on what you sold for fixed forward gallons while at the same time not having extra gallons that you have to move if the heating degree days are lower than expected as they were this past winter. Dealers also need to be sure their customers understand that they are only able to get the number of gallons they fixed at the pre-buy price and that once those gallons are gone they are purchasing at the then-current market prices. Another tool that dealers can use to aid with the varying temperatures is weather derivatives that can pay you if the temperatures are either warmer or colder than what they are planning on.

Oil & Energy: Basis blowouts were a big story in recent winters. How significant is basis risk in 2016, and how can marketers prepare?

Sprague: Looking at the supply and market structure picture today, it would certainly appear as though the near-term heating oil basis risk is less than it has been in the past. However, we need to be cautious about using the term “basis” too generally. Most people equate “basis blowout” with a physical price premium in a given broad-market region, like New York Harbor. While that certainly can happen, it is important to remember that basis blowouts can occur on a locational level as well. For example, if NYH supply and cash prices are relatively stable but prices spike in a particular market due to supply or logistical issues specific to that market, is the retailer in the market any less impacted? Of course not. A price spike is a price spike regardless of where it occurs in the supply chain – terminals sometimes run out, barges can get delayed, harbors freeze. Any of these situations can result in a locational basis blowout that increases costs to the retailer. Overall, though, a certain level of basis protection in the form of guaranteed differentials is a strategy that on average carries more potential benefit than it does risk.

Aletheia: My experience over 17 years has shown me that basis can be a great talking point for suppliers and consultants, but in reality it can be a lot of unnecessary fear. Why would I want to lock in basis in such a well-supplied market? To take it a step further, when the heating oil spec moves to 15 PPM in every state, basis risk will be reduced even more. Energy companies have come to rely on fixed wet barrels without counting the cost and relying too heavily in some instances. The great fear of being stuck without oil is certainly of concern, but also remember that wholesale suppliers have a Force Majeure clause written in all supply contracts. This past year is a prime example that during the winter, basis at the racks was actually at a discount to the Nymex. This meant that the 10 to 13 cents over the Nymex you paid to lock in your basis was costing you substantial lost margin.

Angus: Basis risk is not a new phenomenon, nor was this year anything overly extreme. The basic risks that exist for a dealer (other than the operational efficiencies that are sometimes overlooked) are “flat price” (the price of oil in the marketplace), weather (how many gallons you will sell), and basis – the spread between the “index” (Merc, Harbor, Platt’s, Argus) and the local purchase point (generally the rack). With different products (Heating oil, ULSD) in the marketplace, there are a few choices to deal with basis risk – including doing nothing about it. Our perspective is that since the risk is rarely unique to a particular dealer, you need to educate yourself about this specific risk, and determine whether you wish to look to manage it.

Global: A program of fixed price contracts and/or basis contracts lock-in deals along with a responsible hedge is the best way for a marketer to reduce risk.

Hedge Solutions: Basis risk cuts both ways. You can over-hedge basis and end up paying too much. Under-hedge the basis and even a short-lived “blow-out” can wreak havoc on your P&L. Forecasting is important, but it’s important to adopt a strategy that covers you in both cases.

Irving: Basis blowouts (spot cash prices much higher than Nymex futures) have been kept to a minimum in recent years. With the mild temperatures this winter and lack of any hurricanes affecting supply this past hurricane season, basis has been able to remain fairly low. I wouldn’t say basis is stable, as it can and has moved all over the place from day to day. However, it has not skyrocketed to the upside like it has at times in the past. Going forward ,for this year I do not see the basis risk as being significant. Of course we have had several years without major weather disruption to supplies, but that can change at any time. (We are due for a more active hurricane season one of these years.) When dealers buy fixed-price forward gallons they are at no risk for a basis blowout since their cost is already set. Some dealers also lock in diffs to the Nymex futures for forward months, which protect them if the basis does blow out. Dealers should realize, as with all kinds of insurance or risk management, that there is an imbedded cost. If the future basis is much lower when the gallons are purchased/priced, they may be paying more than a current basis level. However, if the basis does blow out, they can buy at much lower than the then-current price levels. In my experience, protecting basis by buying forward diffs does not pay off the majority of the time. Actually owning product in storage or buying the forward gallon from a supplier is the best protection.

Powerhouse: Basis reflects differences between New York Harbor and the local price, Most of the basis difference reflects transportation. In addition, basis can reflect the local supply situation. A “blowout” occurs when local supply is unusually affected adversely by weather-related demand or problems at local terminals.

It is because weather and terminal problems are unpredictable that one cannot evaluate how significant a risk to price exists from local conditions. There is a Nymex basis contract that can help the dealer hedge against a blowout in the New York Harbor spot market. One benefit of the paper hedge is that it can be liquidated at the buyer’s discretion. Dealers who bought fixed barrels in anticipation of a blowout this year were stuck with physical barrels in a warm winter.

Oil & Energy: What are your expectations regarding customer demand for price protection programs in 2016?

Aletheia: Companies spend millions of dollars to predict customer behavior. The truth is we just don’t know exactly what the flavor of choice will be this year. Many factors play a role in a consumer’s decision to participate or not in a price protection program. The advice I give to my clients is to cover all the bases. This way you shield yourself from customer attrition. Offer prebuy fixed and budget caps, and all your bases are covered.

Angus: I expect that there will be a mass migration from fixed-price programs (knee-jerk reactions) towards price caps. Likely total programs will increase, as there may well be an increase in customer attrition, as dealers fight for new customers with (generally) their weapon of choice – a lowball offer. Although this past winter is one that screams of the benefits of weather derivatives and cap offers, the customers should – unless they fixed their prices – be happy. Signing them up for capping might keep them that way.

Global: As we’ve all seen, retail pricing programs have been diminishing since the last huge collapse in the 2008-09 season. Layering in your purchases for pricing programs is your best protection. Buy a piece, price it, and if you sell out of it, reload with another piece, adjusting the price if necessary. This approach will not eliminate all the risk, but it will diminish a good piece of it.

Hedge Solutions: It’s difficult to say. One can make a strong argument for signing up at these levels. Particularly for a budget cap. You can lock your customers into a budget payment significantly lower than last year. Pure mathematics reveal the obvious: Prices have a lot more room to move higher vs. lower.

Irving: Expectations are for a fairly strong demand this year. Current price levels are low compared to recent years, and that means customers can lock in lower this year. If the prices remain low as we get into the main buying season for next winter, the demand should be there. Commercial customers are already locking in budgets. They can’t really lose, because they are guaranteed to beat their budgets no matter where prices are in the future. There are always those who won’t want to lock in because they feel they got burned again this past winter since street prices were lower than what they may have locked in. Most customers did not use all of their prepaid gallons because of the extremely warm weather this year. Those customers could very well be encouraged to move the money into gallons for next season at a lower cost. I would think that the cap programs would not look quite as attractive this year, but those that made out well with them in the past two seasons could very well continue the strategy even with the low prices that are likely to be offered this year.

Powerhouse: Low prices are an opportunity for marketers. Some marketers are offering two-year programs. We see the biggest resistance to the programs coming from retailers refusing to offer them. This is a mistake. There is a great story to tell this year: “Prices are the lowest in many years, and as your supplier, I am here to help you keep your fuel bill low into next winter (or beyond).”

Sprague: There is no reason to expect that retailers that have traditionally offered price protection programs won’t continue to do so. As with last year at this time, retailers are looking at an opportunity to offer programs for less than they did the year before. That offers consumers a great opportunity to secure low-cost energy for next season. Given the continual threat of natural gas conversions, retailers should be prepared to extend that price opportunity to their customers.

Oil & Energy: Does this pricing environment create opportunities for petroleum marketers? How can marketers capitalize on today’s low prices?

Angus: The “opportunities” that low prices bring, can be a two-edged sword. On one hand, the cost of doing business – filling your truck, financing receivables, staying in compliance with supplier and bank credit lines, etc. – is much easier with oil at $1.25 than it is at $3.25. The flip side is that the marketplace has an ability to weed out the “weaker sisters” when prices are higher. Now (this is an exaggeration), anyone with an oil truck and a few thousand dollars, can start to poach your customers.

The industry’s main challenges are not price-related, but industry-related. As long as dealers view price as the only differentiator, the “churn” will continue, margins will drop, and the ability to service customers will wane. Looking at the (lack of) efficiencies in your operations, and into diversifying from simply believing that if you have a truck and a local address you will succeed, is what is needed to “capitalize”

Global: Well, it certainly does help marketers compete with other energy sources, especially natural gas. Lately, heating oil has been getting a bad rap due to the higher costs over natural gas. The current lower heating oil prices help level the playing field with natty gas and helps dealers retain more of their customer base as well as increase margins.

Hedge Solutions: I am a big proponent of price protection, specifically a cap and more specifically a budget cap. Budget accounts use more oil, stay longer (so they are more loyal), the margins are better, and they typically don’t shop the price. They’re great for cash-flow and also add the most value to your customer list. Adding another layer to certainty is price protection. If you think about the advantages, they’re significant; you won’t be forced to raise their budget payment if prices spike, and if prices go down, they experience the windfall. I believe this value proposition keeps them firmly on board with the oil company vs. shopping around for a better deal. A recent industry survey reveals that one of the major factors that makes the consumer restless is price volatility. The budget cap provides level payments and avoids any negative surprises.

Irving: Lower oil prices are good for petroleum marketers, as they allow for better competition against other forms of energy, such as the recent struggles against natural gas conversions in many areas. The low prices are good for the largest marketers right on down to the smallest of dealers. When product prices are low, dealers tend to make better margins, while at the same time customers are still happy. It is a win-win for the seller and the buyer. However, wholesale margins do not have an increase like retail margins do, because of the lower oil prices. Lower prices can create opportunities for growth. The lower prices usually mean a lower credit limit is required to run a business, lower inventory costs, and lower total receivables. The result leaves more cash available for investment in equipment or expansion of the business. Diversification of offers is a good idea to keep a business running, because one item may do well while another may not. We have seen in recent years that many oil dealers have added propane to their oil business or even wood pellet stoves in some areas. Oil, of course, is a good product today because of the lower cost, but marketers have to be prepared for what may happen in the future. The marketers that have storage can take advantage of today’s low prices and contango market (futures prices higher in outer months than the prompt screen) to make additional margin. The oil can be bought at today’s low cost, sold to customers at future prices and then delivered in the future. The gain is locked in. The current low prices make marketing new oil heating equipment to customers easier. Advertising can point out how efficient, cost friendly, and environmentally friendly new lower sulfur heating oils can be.

Powerhouse: Yes! Low prices should be attractive to customers. It is up to the dealer to make the customer aware of the opportunity to purchase at historically low levels.

Sprague: This pricing environment certainly does create opportunities for marketers. What retailer wouldn’t enjoy the opportunity to offer their customers lower energy prices than they did the year before if they can maintain their margin objectives? The current price environment offers that opportunity. Low and stable energy prices can and should be leveraged to protect or even grow market share. A customer lost to natural gas doesn’t ever come back. Today’s retailer has access to a wide variety of supply and price certainty programs that can be extended to their customer base. With programs like Sprague’s Small Volume HeatCurve, a retailer can offer even a single homeowner price protection if that’s what the customer really wants. Why not take advantage of that rather than risk losing the customer to natural gas or a competitor?

Aletheia: In this current market petroleum marketers can take advantage of storage. The current carry in the market allows companies to put cheaper oil into storage and sell into the screen at a much higher level, thus locking in a profit.

Sprague Disclaimer: These responses are provided for informational purposes only and are not intended as advice on any transaction nor is it a solicitation to buy or sell commodities. Sprague makes no representations or warranties with respect to the contents of such information, including, without limitation, its accuracy and completeness, and Sprague shall not be responsible for the consequence of reliance upon any opinions, statements, projections and analyses presented herein or for any omission or error in fact.

Hedge Solutions Disclaimer: The information provided in this article is general market commentary provided solely for educational and informational purposes. The information was obtained from sources believed to be reliable, but we do not guarantee its accuracy. No statement within the update should be construed as a recommendation, solicitation or offer to buy or sell any futures or options on futures or to otherwise provide investment advice. Any use of the information provided in this update is at your own risk.

The Participants
Aletheia Consulting Group
Mark Skaparas
mark.skaparas@aletheiaconsultinggroup.com
Phone: 508-721-7604
Fax: 508-721-7605
www.aletheiaconsultinggroup.com

Angus Energy
Philip Baratz
philip@angusenergy.com
Phone: 954-564-7500
Toll free: 800-440-0472
Fax: 954-564-7045
angusenergy.com/

Global
Bill Braunig
Direct: 781-398-4318
Mobile: 508-769-6049
Twitter: @BillBraunig
www.globalp.com
bbraunig@globalp.com
Global Partners LP
800 South St., Waltham, MA 02454

Hedge Solutions
www.hedgesolutions.com
Adam Larkin
Phone: 800-709-2949
Email: alarkin@hedgesolutions.com
Cell phone: 603-785-2321
Fax: 1-603-644-7883

Irving
www.irvingoilcommercial.com
NavDesk Team
Phone: 1-877-942-3600
Email: navdesk@irvingoil.com 
Fax: (603) 559-8793

Powerhouse
Alan Levine, Chairman
Elaine Levin, President
David Thompson, CMT Executive Vice President
Phone: 203-333-5380
Email: contact@powerhouseTL.com
Website: www.powerhouseTL.com

Sprague
David P. Daoust
Sprague Operating Resources LLC
185 International Drive
Portsmouth, NH 03801
Toll free: 888-440-4944
Direct: 603-766-7437
Email: ddaoust@spragueenergy.com
Yahoo IM: dpdaoust
www.spragueenergy.com

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