US energy firms lament liquidity 'void' after bank exits

The retreat of banks from commodities has caused liquidity to dry up, making it much tougher to hedge, say participants at Energy Risk Summit USA

Orlando Alvarez - BP
BP's Orlando Alvarez

Traders and risk managers painted a dire picture of liquidity in US energy derivatives markets – especially long-dated natural gas and power – during the annual Energy Risk Summit USA conference in Houston on May 12–13.

The retreat of investment banks from commodities was repeatedly cited as the  reason why liquidity had dried up. Without large financial institutions to make markets, energy firms had fewer counterparties for hedging transactions and faced higher hedging costs, participants at

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