OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. REUTERS/Ramzi Boudina
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U.S. shale oil companies are using the post-OPEC rally to hedge their oil price risk for next year and 2018 above $50 a barrel, bankers, merchants and brokers said, pushing the forward oil curve upside down. The rush to hedge – locking in future cash flows and sales prices – could translate into higher U.S. oil production next year, offsetting the first output cut by the Organization of Petroleum Exporting Countries in eight years. Across the U.S. oil sector, companies pounced.Pioneer Natural Resources Co., for example, said in early November that it increased its hedges for next year to 75 percent of production from 50 percent. In the third quarter, Devon Energy Corp. more than quadrupled its 2017 positions from the prior three months.WTI oil prices gained 12 percent last week – the biggest weekly gain in almost six years – after OPEC announced its cut and Russia promised to reduce output too.
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