Europe airlines hedge against soaring fuel

European airlines are hedging their fuel needs to protect against surging oil prices but their bets could go wrong if Chinese demand starts to slow after this summer’s Olympics, pulling crude lower, analysts say.

Fuel accounts for more than a third of airlines’ operating costs and companies fear even higher oil prices due to falling inventories and robust Asian demand.

China, the world’s No. 2 energy user after the United States, has been scrambling for oil to stockpile before the Olympics, helping fuel a rise in prices to a record high of almost $140 a barrel on Monday.

Reuters