• 4 minutes China - EU: Xi Says Cooperation Is Mainstream In Their Ties
  • 8 minutes The Mining Industry Has Had It Easy For Far Too Long
  • 11 minutes Lawsuit-Happy Councilor Wants to Take Big Oil to Court
  • 15 minutes U.S. Shale Output may Start Dropping Next Year
  • 3 hours Dutch Populists Shock the EU with Election Victory
  • 51 mins Venezuela Says Russian Troops Land to Service Military Equipment
  • 2 hours Trump to Make Allies Pay More to Host US Bases
  • 9 hours Multi-well Pad Drilling Cost Question
  • 19 hours U.S.-China Trade War Poses Biggest Risk To Global Stability
  • 2 hours Public Companies that attended OPEC "THREAT DINNER" at CERRAWEEK must disclose any risks in their SEC Financial filings.
  • 4 hours 3 Pipes: EPIC 900K, CACTUS II 670K, GREY OAKS 800K
  • 2 hours England Running Out of Water?
  • 2 hours Read: OPEC THREATENED TO KILL US SHALE
  • 2 hours Mexico Demands Spain and the Vatican Apologize to Indigenous People for the Spanish Conquest
  • 1 day One Last Warning For The U.S. Shale Patch
  • 1 day European Parliament demands Nord-Stream-ii pipeline to be Stopped
  • 2 days Modular Nuclear Reactors

U.S. Shale Becomes More Flexible, Hedges 900,000 Barrels

offshore rig

U.S. oil producers have hedged almost 900,000 barrels of future crude at prices of US$50-60 a barrel, which will likely allow them to continue growing production whatever OPEC decides to do at its meeting tomorrow.

Bloomberg quotes data from Wood Mackenzie that shows during the third quarter, 33 E&Ps hedged a total 897,000 barrels of future production, which was a 147-percent jump over the second quarter and the biggest one since Wood Mac started tracking hedging data.

The most active hedgers were Hess and Cenovus – they accounted for more than a third of the total hedged amount of future production. Some 14 companies from the sample of 33 locked in the future prices of at least 25,000 bpd in production.

“Producers that are able to lock in prices above previous expectations may feel more comfortable with increasing activity. Others may leave budgets unchanged and promote higher cash-flow guidance to an investment community anxious about profits," Wood Mac analyst Andy McConn said.

In any case, the news is not particularly good for OPEC, for whom U.S. production and specifically shale production is a major pain in the neck. It is a pain that refused to go away even when the cartel tried to drown it in oil, and not only that but the shale industry proved more resilient than OPEC had expected.

Related: U.S. Oil Has One Fatal Weakness

When the traditional strategy of flooding the markets with crude to stifle the competition didn’t work, OPEC agreed, along with almost a dozen other producers led by Russia, to cut production by 1.8 million bpd to prop up prices that had sunk into the low US$30s.

Now, the cartel and its partners are due to meet in Vienna to discuss an extension of the deal, and while last year the degree of certainty about a positive outcome was pretty high, now there are doubts about Russia signing on to another nine-month option, which it actually proposed.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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