Oil producers are wary of potential regulation of commodities markets

07/28/2009 | Houston Chronicle (tiered subscription model)

Oil producers are concerned that any federal regulations implemented to curb speculation in commodities could affect their practice of hedging against price changes through derivative contracts negotiated outside futures markets. "Hedging in this industry is very important," says John Felmy, chief economist at the American Petroleum Institute. Producers hedge the sale of crude and refiners hedge their purchases to predict cash flow.

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