Last year, Mexico hedged almost all of it's oil exports at around $70, and had also bought put prices on oil.
The other day, we heard from an economist at Deutsche Bank that Mexico could remain unhedged “If the oil price is fluctuating near $70, Mexico will not need to do hedging.”
Mexico is getting $9 billion in November because of the put contracts, and if you are Agustin Carstens, the finance minister of Mexico, and you remember oil just being at $32, and your average price of oil sold this year is now $45, would you lay off any supply here at $70!
That's even a bet Carlos Slim would take!
The idea that Mexico will go naked without hedging oil at these prices is ridiculous.
No one wants to talk about it, because we have had a dramatic shift in the positions of crude speculators from being short, to now being long 4X the contracts that they previously were short, and with that, oil has also had a corresponding rise.
"Vendido a usted!"