Surge in oil hedging could worsen US supply gut

by Dramelin 11:30 PM 0 comments

Brent oil prices traded around $51 a barrel, about 12 percent lower year-to-date.
"Those hoping that recent oil-price weakness will prompt U.
S.
producers to pull back drilling activity and ease the glut of oil supply may need to keep waiting," said the consultancy.
A surge in oil hedges will spur drilling activity in the U.
S.
, Wood Mackenzie said in a report released on Monday, likely keeping a supply response in place longer than expected even if spot prices fall sharply.
But according to recent disclosures, producers have rushed to hedge, or lock in, oil prices above $50 a barrel after OPEC`s November announcement to cut production.
"Oil futures prices must recover before producers can lock in prices over US$55 a barrel for next year, which is what we think is needed to organically fund significant (shale) oil production growth," he said.