Oil’s Low Prices Draw Rash Of Hedging

Cat:

Related stories

Tinubu Names IBB’s Son, Top Experts to Lead Key Nigerian Agencies

By Abiola Olawale President Bola Ahmed Tinubu has appointed Muhammad...

2027: Labour Party Appoints Nenadi Usman as Interim National Chairperson 

By Abiola Olawale  Ahead of the 2027 general elections, the...

By Julianne Geiger 

Last week’s crashing oil prices were awfully tempting last week for big oil consumers, who took advantage of the low prices to hedge against the inevitable price rise.

Major oil consumers such as airlines boosted their hedging at a rapid pace, according to a Bloomberg analysis of trading data. It was clear last week that there was a sharp rise in trading activity for crude oil, but the extent of the flurry of activity is only now quantifiable with bank positioning data, Bloomberg said.

Swap dealers saw the second-largest increase on record in long positions in the ICE futures and options, as contracts increased by 54,000. The only time in history that they’ve been higher was back in 2018.

These big crude oil consumers were at the mercy of high oil prices for much of last year, and are now looking to cash in on the recent price crash. And they’re not wrong in thinking that there is a good chance oil prices will recover yet this year.

Oil analysts are forecasting that there will be an oil price recovery this year, banking on a push of demand thanks to China’s reopening.

In one anecdote cited by Bloomberg, European airline Deutsche Lufthansa AG said it increased its oil hedging to 85% of its planned usage—returning to the levels it was hedging prior to the pandemic.

Brent crude prices fell spectacularly last week, to just over $72 per barrel, but have since shown signs of recovery. Brent prices are now trading at $78.15 as of 10:00 am ET, a 0.08% gain on the day but a $3 gain on the week. Prices, however, are still $8 less than where prices were towards the beginning of the month.

The question now is, when will prices rebound fully, and is now still a good time to hedge, or have big users who haven’t yet hedged missed their opportunity? NB: Julianne Geiger for Oilprice.com

The New Diplomat
The New Diplomathttps://newdiplomatng.com/
At The New Diplomat, we stand for ethical journalism, press freedom, accountable Republic, and gender equity. That is why at The New Diplomat, we are committed to speaking truth to power, fostering a robust community of responsible journalism, and using high-quality polls, data, and surveys to engage the public with compelling narratives about political, business, socio-economic, environmental, and situational dynamics in Nigeria, Africa, and globally.

Subscribe

- Never miss a story with notifications

- Gain full access to our premium content

- Browse free from up to 5 devices at once

Latest stories

NDN
Latest News
Drama as Okpebholo Tells Peter Obi: Notify me Before Visiting Edo or Else I Can't Guarantee Your SecurityTrump Vows to Sue Rupert Murdoch as Epstein Report Opens New Rift in Their RelationshipTinubu Names IBB’s Son, Top Experts to Lead Key Nigerian Agencies2027: Labour Party Appoints Nenadi Usman as Interim National Chairperson Alleged $9.6 Billion P&ID Fraud: Fleeing Briton’s Surety Arrested, Produced In CourtWhy Oil Prices Could See a Significant Upside ShiftPresidency Announces Gov Umo Eno as APC Leader in Akwa Ibom, Sparks ReactionsBreakdown of Buhari’s Family EntitlementsThaksin touts golden visa, higher travel fees to boost ThailandDangote Refinery Halts Fuel Discount Program Over Alleged Marketers Fraud2027: Intrigues as PDP Confirms Move to Bring Peter Obi Back After Atiku’s DepartureAre You Pregnant? By Johnson Babalola2027: Buhari’s exit Cripples APC in entire North as CPC Loyalists Defect in Large NumbersDrama as 16, 17-year-olds Now Allowed to Vote In UK ElectionsSenate passes $9 billion in spending cuts to public broadcasting, foreign aid requested by Trump
X whatsapp