Shale producers locking in WTI here at $53 with hedges

[Roch + 537]

They are doing it because they think there is limited price upside for a while.

Why ?  Don't know.

But, I'm with them because I would think they know better than most. 

Maybe :

* Covid mutations and resurgence ?

* New Lockdowns ?

* Questioning effectiveness of vaccines ?

* They think OPEC cuts are really a joke ?

* New production and exports from Iran, Venezuela , Libya , Iraq Kurds , Nigeria (call it condensate so doesn't count as production) , Brazil record production and growing ,  Guyana/Suriname ramping ?

* U.S. shale rigs thus Production growing ? 

* Too much oil ? Probably.

Edited January 15, 2021 by Roch

[Tomasz + 1,608]

Well WTI at 53 $ means Brent at about 58 $ per barrel. Do you really think this price and cancellation of some OPEC+ voluntary cuts is bad situation for major oil exporters? I would get such price of nearly 60 $ for granted.

And I would be glad that in the face of the greatest recession in 80 years, the price of oil is still surprisingly rather high, because many experts did not expect that the average price of Brent crude oil would be higher than $ 40 in 2020 and significantly higher already in 2021.

In my opinion, if the vaccines are not fucked up somehow, at least the highly developed countries of the world will try to vaccinate at least all those most exposed to the coronavirus as quickly as possible and somehow get back to normal.

Which, taking into account that we are already in the 7th year of significantly lower investments in the oil sector around the world, at least in the next few years, it bodes well for  oil and, more broadly, for practically all commodities considering that central banks around the world print empty money.

Personaly I think next 5 years will be a bull market for practically all commodities and I agree with Goldman Sachs forecast up to 2025.

Edited January 15, 2021 by Tomasz