Hedging Case Study


Fuel and Lubricant Producer


Risk Management


6 Weeks

The Problem

Momentum3 was presented with a challenge from an existing customer that hedges their fuel and lubricant products in storage to protect against market moves. The client utilized a manual process that did not support their growth rate or desire for more timely information. The client desired to increase accuracy while executing their hedging strategy as well as more accurately report on and value their inventory in bulk storage facilities, consignment locations, and reserves (i.e. for hurricanes). From a sales perspective, they also strived for the ability to better manage fixed price transactions with customers.

Project Summary

Momentum3 developed a solution to resolve their issues while capturing near real-time ticket and pricing information associated with product pick-up and delivery. This system integrates with the clients existing systems to efficiently automate the timely collection of ticket information and market prices. Access to current WACOG information allows increased profits and cost-savings when executing sourcing decisions for product sales and delivery based on the cost of their product versus current rack prices.

The ticket information generates physical transactions in the system which are monitored by the Risk Manager so hedges may be put on or rolled off much more quickly, allowing for efficient and effective hedging. These financial transactions are captured and managed in the new system creating near real-time inventory physical positions, the current weighted average cost of products in inventory and more timely financial transactions to better manage their hedging strategy.

Solution Benefits

 The new solution provides integration between systems, more efficient access to physical and financial trades, automated settlement of financial transactions, near real-time WACOG of product, and current inventory levels. All of which lead to more efficient operation of the hedging and risk management business.

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