NEW YORK/MEXICO CITY (Reuters) - Mexico has made the first moves to launch its annual $1 billion oil hedging program by asking banks for quotes, sources familiar with the deal said, while buying in financial oil options contracts for 2020 has risen in recent days, consistent with the giant trade.
A Wall Street source and a Mexican congressional source familiar with the program, both of whom declined to be identified because of the sensitive nature of the deal, told Reuters on Wednesday that banks have been submitting offers for the hedge and that Mexico had requested these quotes.
The country buys as much as $1 billion worth of financial positions in a series of highly anticipated oil trades in order to protect its revenues from oil sales for the coming year against price volatility.
Buying in specific financial oil options contracts for 2020 in U.S. West Texas Intermediate crude and Brent crude has increased in recent days, two market sources familiar with the Mexico hedge said.
The Mexican finance ministry did not immediately respond to a request for comment.
Reporting by Devika Krishna Kumar in New York and Stefanie Eschenbacher in Mexico City; Editing by Marguerita Choy