Posting this for those who are interested in Crude and what to anticipate as there is lots of uncertainty around this market. Because of that some major hedge funds prohibited their traders to trade running crude oil contracts.
On Market uncertainty -
"Bloomberg has reported that only 50% of shale producers have hedged 2021 production compared to 60% that had done so at a comparable point last year. Many producers are finding themselves trapped in a Catch 22 situation. The current WTI price of $32/barrel is still way off the ~$50/barrel that many shale producers require to turn a profit. Hedging at this point would effectively mean foregoing any future price gains and guaranteeing yourself a loss. With production cuts so far working nicely, the recent storage crunch now in the back mirror and economies gradually emerging from lockdown, that appears like a rushed decision.
On the other hand, this oil price rally appears to be running on fumes, and failing to hedge means risking even lower prices in the future. For instance, whereas the WTI June contract has rallied some 75% this month, WTI swap for 2021 has only climbed 10%. This essentially means that traders are very unsure whether the gains being made in the crude markets are here to stay."
More - oilprice.com/Energy/...erously-Exposed.html
On Market uncertainty -
"Bloomberg has reported that only 50% of shale producers have hedged 2021 production compared to 60% that had done so at a comparable point last year. Many producers are finding themselves trapped in a Catch 22 situation. The current WTI price of $32/barrel is still way off the ~$50/barrel that many shale producers require to turn a profit. Hedging at this point would effectively mean foregoing any future price gains and guaranteeing yourself a loss. With production cuts so far working nicely, the recent storage crunch now in the back mirror and economies gradually emerging from lockdown, that appears like a rushed decision.
On the other hand, this oil price rally appears to be running on fumes, and failing to hedge means risking even lower prices in the future. For instance, whereas the WTI June contract has rallied some 75% this month, WTI swap for 2021 has only climbed 10%. This essentially means that traders are very unsure whether the gains being made in the crude markets are here to stay."
More - oilprice.com/Energy/...erously-Exposed.html