EnergyWatch

Oil market turns upside down as shale rushes to hedge post-OPEC

US shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 , which could translate into higher US oil production next year.

Photo: Kamran Jebreili / AP Polfoto

US shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 above USD 50 a barrel, bankers, merchants and brokers said, pushing the forward oil curve upside down.

The rush to hedge – locking in future cash flows and sales prices – could translate into higher US oil production next year, offsetting the first output cut by the Organization of Petroleum Exporting Countries in eight years. As such, the producer group could end throwing a life-line to a sector it once tried to crush.

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