Oil producers and traders taking advantage of rebound in crude oil

Oil producers and trading companies have invested in financial instruments

Baku. 17 May. REPORT.AZ/ Oil producers are taking advantage of the rebound in crude markets to lock in protection against another slump. 

Report informs referring to the Russian RBK, they increased their bets on falling prices to the highest level in 4.5 years as US inventories of stored oil remained near an 87-year high, while a natural disaster in Canada and militant attacks in Africa curtailed output. Negative sentiment among the group expanded for a third consecutive week, the longest streak since February. 

Energy companies from EOG Resources to Chesapeake Energy used financial instruments such as futures, swaps and collars to guard against another fall in prices. 

West Texas Intermediate oil, the benchmark US crude, has gained more than 75% since hitting a 12-year low in mid-February. "They've been getting more and more active in hedging ever since the first initial jump," said John Kilduff, a partner at Again Capital in New York. Oil producers "appear to be drawn to this market as everyone tries to stay alive through the downturn," he said. 

Producers increased their short position in WTI by 3.8% for the week ended May 10 to the highest since September 2011, according to Commodity Futures Trading Commission. In Canada, raging forest fires closed in on Alberta's vast oil sands, prompting thousands of residents to flee and interrupted shipments of the thinning agent used to help move the extra-heavy crude produced there through pipelines.

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