Oil Driller Hedges Soar To Five Year Highs

One recurring theme observed throughout the oil rally since the February 13 year lows, has been increasingly more aggressive hedging action by producers, who are willing to give up upside gains in order to protect from yet another swoon lower in prices. And, as Goldman cautions in its latest note on ongoing imbalances in the oil market, “the rally in long-dated prices has taken prices to levels ($50/bbl in 2017) where hedging activity is ramping up which suggests it will soon stall.”
This can be seen in the following chart of overall hedging activity by oil explorers which as of this moment is the highest since mid-2011.

This post was published at Zero Hedge on 05/16/2016.