Tuesday March 28, 2017

// March 28th, 2017 // Daily News

Surge in oil hedging could worsen US supply gut: Wood Mackenzie

CNBC.com
Oil jack pumps are pictured in the Kern River oil field in Bakersfield, Calif.
A surge in oil hedges will spur drilling activity in the U.S., Wood Mackenzie said in a report released on Monday, likely keeping a supply response in place longer than expected even if spot prices fall sharply.
“Those hoping that recent oil-price weakness will prompt U.S. producers to pull back drilling activity and ease the glut of oil supply may need to keep waiting,” said the consultancy.
U.S. West Texas Intermediate crude oil traded around $48 a barrel on Tuesday, some 15 percent lower year-to-date because of concerns over rising U.S. production and uncertainty over whether OPEC and other key producers will extend production cuts totaling nearly 1.8 million barrels per day (bpd) into the second half of the year. Brent oil prices traded around $51 a barrel, about 12 percent lower year-to-date.
But according to recent disclosures, producers have rushed to hedge, or lock in, oil prices above $50 a barrel after OPEC’s November announcement to cut production.
In its analysis of 33 of largest upstream companies with hedging programs, Wood Mackenzie found that the companies have added an annualized 648,000 barrels a day of new oil hedges since the fourth quarter of 2016, an increase of 33 percent from the third quarter of the year and more than in any of the previous four quarters.
“Those producers – most of which are highly exposed to U.S. (shale) – will use hedging gains to help plug any budget deficits caused by sub-$50 spot prices,” said Wood Mackenzie research analyst, Andy McConn .
Most of the new oil derivatives were added at strike prices between $50-$60 a barrel, he added.
But hedging’s effect on oil-supply fundamentals should not be overstated as most of the hedges will expire by 2018, McConn said.
“Oil futures prices must recover before producers can lock in prices over US$55 a barrel for next year, which is what we think is needed to organically fund significant (shale) oil production growth,” he said.

Today’s Inspiration

I Understand

by Joyce Meyer – posted March 28, 2017

For we do not have a High Priest Who is unable to understand and sympathize and have a shared feeling with our weaknesses and infirmities and liability to the assaults of temptation, but One Who has been tempted in every respect as we are, yet without sinning.
—Hebrews 4:15

As human beings, we have a deep need to be understood. When we don’t receive it, we feel lonely. In listening to people share their hurt and pain, I find that the words “I understand” have a very soothing effect. I have told my husband, “Even if you don’t have a clue about what I am talking about, just tell me you understand, and it will make me feel a lot better.”

A man could not possibly understand PMS, but it is better for him if he appears to have understanding of his wife’s plight. She needs to be understood. She does not want to feel alone in her pain and struggle. One day my husband came in from trying to play golf. He had not had a good experience because his leg was hurting and swollen. He was not too happy about it. His golf game is really important to him, so I said, “I understand how you feel.” I offered him whatever help I could give physically, but my understanding seemed to help more than anything.

There have been times in the past when my attitude has been, “What’s the big deal? It’s only one round of golf. After all, you play all the time.” That attitude has started arguments and driven a wedge between us. He wants me to understand his needs, and I want him to understand mine.

One of my favorite scriptures in the Bible is Hebrews 4:15, which teaches that Jesus is a High Priest who understands our weaknesses and infirmities because He has been tempted in every respect just as we have, yet He never sinned. Just knowing that Jesus understands makes me feel closer to Him. It helps me be vulnerable and trust Him. It helps me feel connected rather than lonely.

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