Market Insights

October 6, 2015 • Posted in Market Insights

Week of October 5, 2015

  • Oil prices moved up slightly from last week’s close
  • Traders and analysts remain pessimistic that oil will continue trading higher in the coming weeks due to mixed outlooks for the global economy
  • Volatility in oil has led many companies to hedge against oil price moves and even hedge the future cost of oil storage in terminals
  • This large “paper” market for oil affects how companies respond to oil price signals
    • One analyst speculated earlier this year that US producers have hedged 22% of their 2015 output
    • Hedges soften the blow from price drops and delay the decision to cut production, which may help explain why US output has been so slow to adjust as prices fell
  • Hedges reduce risk for individual companies but may make the overall market harder to read

 

WTI Crude Oil & Brent Crude Oil 10052015

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