Terry Thprsen

Oil Guesses Are Wrong Again, Contango Grows

The Mexican hedge unnerves me. At current prices someone is on the hook for about $19b. Assuming Goldman and Barclay have hedged out their risk then this looks like another potential unwind: CDS dominoes part 2. I guess if oil gets back in the $65+ range then it's no longer a lot of money, but what if it drops all the way back to $20? That's a tasty short squeeze that a few sovereigns are in a position to effect.