LOADING

Type to search

US Shale Producers Lock in Future Sales as Oil Prices Rise to One-Year High

Business Economies Economy hedging oil market oil prices oil production stock market US

US Shale Producers Lock in Future Sales as Oil Prices Rise to One-Year High

Share

NEW YORK/HOUSTON—U.S. shale producers are taking advantage of the oil market’s rally to levels not seen in nearly a year by locking in prices for future sales, sources familiar with the matter said. U.S. crude futures this month jumped above $50 a barrel to the highest since February. The rally has sparked optimism among shale companies, but after a bracing year of pandemic-induced demand destruction, they are not ready to ramp up production. Instead, they are using futures markets to lock in higher sale prices. Shale producers buy and sell contracts in the futures and options markets in a process known as hedging to secure cash flows for later-dated sales. U.S. oil production peaked at nearly 13 million barrels per day in late 2019, but is now around 11 million bpd after coronavirus lockdowns crushed fuel demand and oil prices. Output is not expected to rise much in 2021, but …

Leave a Comment

Your email address will not be published. Required fields are marked *