Oil producers do not believe in a new rally in the oil market and to actively hedge their production with the help of the exchange (futures and options) and OTC instruments (swaps, OTC options, etc.), Fearing that the oil price will fall - based on AMarkets.
For example, at the start of this month the company Laredo Petroleum Inc. hedged by more than 2 million barrels of oil in 2017. Interestingly, the company began to hedge their production (buy contracts to sell at a certain price) before the start of the rally. Reuters conducted a survey among 30 oil producers companies. 17 of 30 increased the number of safety-contracts in the first quarter. $ 45 per barrel - the point below which the trend is steadily becoming pessimistic. In the week that ended on July 12 oil traders increased their shorts by 1.6%. The number of short transactions grew for three consecutive weeks. Development of the oil is reduced.However, oil reserves are still large. The rate of fall of the stock level is very, very slow. At the same shale companies from the United States gradually reduced production - in the last week 6 oil wells and 1 gas were put into operation.