• 2 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 5 minutes Middle East on brink: Oil tankers attacked off Oman
  • 8 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 5 hours Here We Go: New York Lawmakers Pass Aggressive Law To Fight Climate Change
  • 1 min The Inconvenient Truth Of Electric Cars
  • 3 hours Iran downs US drone. No military response . . Just Completely Destroy their Economy. Can Senator Kerry be tried for aiding enemy ?
  • 3 hours Oil Demand Needs to Halve: Equinor
  • 7 hours Ireland To Ban New Petrol And Diesel Vehicles From 2030
  • 5 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 2 hours Solar Panels at 26 cents per watt
  • 8 hours NATO Article 5: Attack on one member is attack on all. Members all must come to defense . . . NOT facilitate financial transactions to circumvent and foil US Sanctions. Somebody please tell Angela.
  • 7 hours Is $60/Bbl WTI still considered a break even for Shale Oil
  • 8 hours Wonders of Shale - Gas, bringing investments and jobs to the US
  • 4 hours Hydrogen FTW... Some Day
  • 3 hours Section 232 Uranium
  • 45 mins Huge UK Gas Discovery
  • 4 hours The Plastics Problem
  • 44 mins Green vs. Coal: Bavaria Seeks Fast-Track German Coal Exit in Snub to Merkel Plan
Alt Text

Iran: A Geopolitical Time Bomb

Oil markets have turned particularly…

Alt Text

War Worries Send Oil Prices Soaring

Bullish sentiment has returned to…

Zainab Calcuttawala

Zainab Calcuttawala

Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…

More Info

Trending Discussions

Increased Oil Hedging Hints At Permian Production Boom

Oil hedges have become popular amongst U.S. shale drillers, who have used the financial trick to lock-in higher prices for their raw goods as barrel prices edge higher.

The prices of half of all shale production this year have been locked in using futures contracts. After the fourth quarter, U.S. oil companies increased their hedges to 48 percent, compared to just 30 percent after the third quarter, according to a note by Goldman Sachs.

Protected prices on future production make it easier for drilling to boost output and lower spending, attracting investors to the oil and gas sector.

"We believe the continued rise in 2018 producer hedging facilitates (oil companies') plans for capital discipline, reducing cash flow volatility," Goldman analysts wrote in a client note.

The wave of hedging has showed up in exchange trade data for the U.S. West Texas Intermediate (WTI) grade. The number of open contracts that have yet to be settled has jumped by nearly a quarter since June, according to Reuters. “The reason is producer hedging in USA as well as the funds all being very bullish. Shale producers will use WTI as a hedging instrument and not Brent,” Oystein Berentsen, managing director for Strong Petroleum in Singapore, told Reuters in an interview earlier in October.

In addition, the rig count has continued to rise in the Permian, where most of the shale action is these days. New hedges could allow Permian producers to continue their drilling efforts, which suggests more production could come online in the months ahead.

Shale output at seven major U.S. oil and gas plays will climb by 131,000 barrels per day in April to hit a 6.954 million bpd according to the Energy Information Administration (EIA). The Permian Basin, in New Mexico and Texas, will see the biggest climb, the data shows.

By Zainab Calcuttawala for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News