Crude Oil Prices Going Up

[repeet]

U.S. crude was down 23 cents at $42.30 a barrel on Friday.

Soooooooo......

OPEC Agrees Oil Supply Crackdown

From the article:

Ministers said they would withdraw one million barrels daily of production -- around 3.5 percent of current supply -- from January 1 and meet again on January 30 to discuss whether further cuts were necessary.

So don't tell me, let me guess. The highly paid "talent" in CCY continues to claim that they have no idea on whether the price of fuel will rise, or not, in the future.

 

[USAirUnited]

U.S. crude was down 23 cents at $42.30 a barrel on Friday.

Soooooooo......

OPEC Agrees Oil Supply Crackdown

From the article:
So don't tell me, let me guess. The highly paid "talent" in CCY continues to claim that they have no idea on whether the price of fuel will rise, or not, in the future.

[post="227846"][/post]​

Why havent we hedged any fuel?

 

[FWAAA]

Why havent we hedged any fuel?

[post="227847"][/post]​

In the bankruptcy filings, U's management said that hedging was impractical for companies in bankruptcy due to the need to put up cash collateral and/or excellent credit ratings. And U has neither.

Those filings indicated that it liquidated its hedges to raise cash around the time of the filing.

The counter argument is that UAL's recent SEC filings disclose some fuel hedging, and it doesn't have a lot of extra cash or a good credit rating.

There seems to be no agreement about whether bankrupt airlines can hedge their fuel purchases. Some people say "Can't be done" while others point to the lack of hedges as further proof of management incomptence.

Regardless what one believes, only one large airline in the USA is sufficiently hedged - and that is Southwest. They gambled that fuel would become more expensive, and their bets have paid off.

If oil had fallen to $20/bbl instead of rising to over $55, every airline exec would look real smart in hindsight and WN management would look real stupid. And since oil has fallen to about $10-$12 more than once since 1986, $20/bbl is certainly possible. But at $42/bbl, WN still looks brilliant and everyone else looks real stupid.

 

[JayBrian]

I believe US closed its hedge position when oil peaked in the mid 50s. If oil remains below that price this can be looked on a smart move.


Jay

 

[FWAAA]

I believe US closed its hedge position when oil peaked in the mid 50s. If oil remains below that price this can be looked on a smart move.
Jay

[post="227852"][/post]​

I agree. Probably not too shabby. The 3Q 10-Q says that subsequent to Sept. 30, US liquidated its remaining hedges (so that places the timing in mid-October when oil peaked) for a gain of $46 million.

Since running out of cash is a more immediate problem than the future price of fuel (at least for a bankrupt airline), hard to find fault with this decision. Lotsa people will, though, I'm certain. B)

 

[funguy2]

BK allows contracts (like for hedging) to be cancelled. Why would anyone sign a contract which US Airways can cancel if its still in BK court 6 months from now?