Mastering the Commodities Markets

COMMODITY HEDGING, TRADING, ARBITRAGE

Hedgers

A hedger is someone who wants to manage or mitigate their perceived risk. This may be anyone from a small diesel importer to a large multinational with a stream of crude from an oil well wishing to protect its prices, to a European fund manager who is worried about the domestic stock market falling – much of which contains energy stocks. Hedgers generally will ‘buy’ the insurance or enter into protection. The tools they use are global market instruments that easily cross borders.

Traders

A trader (or speculator) wants to take risk. The banking and hedge fund community dominates here. Most, but not all traders will make a market, i.e. a bid and an offer. They could be trading supply and demand, ...