nonetheless when prices drop like what happen this quarter should see the advantage of hedging. Hedging seems to prevent exorbitant quarter but should protect investor should prices fall drastically. around me i can see Petron is adding stations most aggresively, could keep if bought at good price.

@Rabbit2
thanks for the info. but shouldn't it be physical delivery instead of cash settlement, since PetronM is not a speculator. the counterparty can easily be an airline hedging their fuel req.

let's say petron agree to sell gasoline at July at RM5...however, the market price already rise to 7..so by 30June Q2 there will be mark to market loss of RM2. however, by this time Petron would have enter new agreement to sell at RM6.5-7 (as the market value is now higher) for Oct. let's say by Sept 30 the market price is RM6, there will be a Mark of market gain of RM1.
No 'reversal', but this is non-cash and the instrument will help when applied consistenly.
Coming quarter result will be really good