Sasol ‘cushioned’ from price volatility

JOHANNESBURG – Sasol continued its free fall yesterday slipping 1.06 percent on the JSE to R55.02 as the price of Brent crude oil collapsed to below $20 a barrel for the first time in 18 years after US oil benchmark prices plunged to below $0 a barrel on Monday.

However, analysts said the petrochemical giant could ride it out, as it had up-scaled its hedging strategy to mitigate against the impact of the price movements.

Lester Davids, a trading desk analyst at Unum Capital, said Sasol’s hedging programme would cushion the company from price volatility.

“It should be noted that a portion of the group’s production is hedged at approximately $33 a barrel which provides some form of cushioning against a rapidly declining oil price,” Davids said.

On Monday, Sasol plunged nearly 10percent as oil prices tumbled to record lows amid rising stockpiles prompted by a slump in demand due to the coronavirus pandemic, differences among the world’s top oil producers, and continuing bickering between Russia and Saudi Arabia.