© Reuters. Who would have thought that oil prices have soared so sharply!U.S. shale oil companies may hedge losses of nearly $20 billion this year
According to the Financial Associated Press (Shanghai, editor Xiaoxiang), for many energy market traders, it may not have occurred at the beginning of the year that oil prices will rise so rapidly during the year. Nowadays, many American shale oil companies have planted a big root because they underestimated the performance of oil prices. According to industry organizations, due to the signing of hedging contracts in advance at a significantly lower price than the current oil price level, shale oil companies’ hedging losses during the year may reach nearly 20 billion U.S. dollars.
According to data provided by the market research organization IHS Markit, although the current transaction price in the United States exceeds $70 per barrel, the average selling price of U.S. shale oil producers is only $55 because the price has been hedged in advance to lock in profits. /barrel.
According to IHS Markit, these shale oil producers’ losses in the first half of this year due to hedging measures reached 7.5 billion U.S. dollars, and as demand continues to improve, if oil prices continue to stay at the current level of around $75 per barrel, the losses in the second half of the year The figure is likely to rise further to 12 billion U.S. dollars.
Shale oil producers have been actively hedging this year to lock in prices to protect profits when oil prices fall. The negative oil price last year has left many shale oil companies still fresh in their memories.
OPEC may “do whatever it wants”
Analysts pointed out that the above-mentioned dilemma faced by US shale oil producers may indicate that OPEC may have more pricing power in the crude oil market in the second half of the year.
Because US shale oil producers seriously misjudged prices when they hedged, they are unlikely to increase production significantly in the short term. Therefore, OPEC can “do whatever it wants” with its own oil production and push prices up to any level it wants.
Enverus analyst Bill Farren-Price said, “As long as OPEC is willing, this cartel can now continue to raise prices without worrying too much about the return of supplies from the United States. Most shale oil producers have locked in crude oil sales at low prices this year. price.”
Shale oil companies are afraid to hedge
At the same time, US shale oil producers are now becoming more cautious about hedging. As many industry organizations have become more optimistic about oil price forecasts, many US shale oil companies have turned to a more wait-and-see attitude.
“Since every investment bank predicts that oil prices will rise to between US$90 and US$100, few people will now hedge,” a shale oil producer executive said.
Many shareholders of shale oil companies have also begun to be more skeptical about the benefits of hedging. In fact, many shareholders now prefer oil companies to increase production rather than hedge. Oil analyst Paul Sankey said, “Hedging provides producers with a way to avoid risks, but this is not what shareholders want.” He said that investors who put money into oil producers hope to gain greater exposure to oil prices.
Raoul LeBlanc, vice president of IHS Markit, pointed out that if you hedge correctly, people will not praise you for it, and if you hedge the wrong one, you will be hit hard.