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The traditional approach to hedging the crude oil refining margin (crack spread) adopts a fixed 3:2:1 ratio between the futures positions of crude oil, gasoline, and heating oil. The latest research indicates that this might not be the optimal approach
This post looks at the products available for hedging power, who is in the PPA market, how the products are traded and where the market is heading.
In the first of a multi-post tutorial series we look at the current market for ‘non-traditional’ PPA's, explain why different players might want to hedge, cover the existing contract types and how power offtake strategies may change.