Less Hedging is good news for Scotland

104335124

© bigstock.com

To protect themselves against price dips, oil producers, especially smaller ones, tend to sell ahead some of their future production. The more they do so, the less certain they feel about future trends whereas if they do less of it then that tends to mean they are more confident prices will rise. It’s called ‘hedging’ as in ‘hedging your bets’.

Some, such as Premier Oil which produces around 80 000 barrels per day has hedged only 10% in the second quarter of 2017 whereas in the same period in 2016 they hedged 30%. Tullow Oil which is of similar size has not hedged at all. This is quite a strong indicator of confidence in price rises of the kind I’ve already reported on this including these:

Refiners begin scramble for crude oil supplies. Now who do we know with lots of that? Oh yes, we do.

Oil price climbs above $51 per barrel as US reserves fall: Scottish North Sea oil remains profitable

These bets may well pay off handsomely for oil producers including those in Scottish waters, if some informed experts are correct:

Independent Scotland’s oil wealth is assured as Aramco chief predicts huge shortages

https://www.oilandgaspeople.com/news/14783/european-oil-producers-weak-hedging-shows-bet-on-price-rebound/

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s