Source: Bloomberg
Source: Bloomberg
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Oil is range-bound due to shale operators’ hedging

Once oil hits the mid $50's, a great deal of shale capacity becomes profitable, and shale operators sell futures to hedge their earnings. That leaves oil in a range for the foreseeable future.

February 28, 2017 9:42 AM (UTC+8)

The spread between oil for delivery 1 month and 6 months hence has collapsed during the past year as oil prices recover. Once oil hits the mid $50’s, a great deal of shale capacity becomes profitable, and shale operators sell futures to hedge their earnings. That leaves oil in a range for the foreseeable future. — David Goldman

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