The Oil and Gas Journal posted this graphic today from a WoodMac study, noting:
"The latest oil hedging activity in WoodMac’s analysis of companies, comprising a group of 33 of the largest upstream companies with active hedging programs, shows that companies added 648,000 b/d (annualized) of new oil hedges since fourth-quarter 2016, which is an increase of 33% from last year’s third quarter..."
Generally new hedges cover the production anticipated from new wells in order to assure the recover of the capital costs, so most of this increase is for new production. Due to decline curves and cost recovery there is little "new" hedging for old production.
This dynamic and the recent increases in production in Nigeria and Libya have probably overwhelmed OPEC supply cuts.
Edited by Geomean, 27 March 2017 - 05:35 PM.
