Shale Hedges Threaten The Oil Rally

The 20 percent increase in oil prices since September led to a
wave of hedging by U.S. shale drillers eager to lock in future
production at prices not seen in years. The flip side of that
hedging wave is that locking in prices could cut the price rally
off at the knees, ensuring that more supply will be forthcoming in
the next few quarters. Shale drillers were hesitant for much of the
year, but kicked their hedging programs into high gear after oil
prices posted strong gains beginning in September. “The past three
months have seen a significant…

The 20 percent increase in oil prices since September led to a
wave of hedging by U.S. shale drillers eager to lock in future
production at prices not seen in years. The flip side of that
hedging wave is that locking in prices could cut the price rally
off at the knees, ensuring that more supply will be forthcoming in
the next few quarters. Shale drillers were hesitant for much of the
year, but kicked their hedging programs into high gear after oil
prices posted strong gains beginning in September. “The past three
months have seen a significant…