US shale producers lock in future sales as oil prices rise

Production down: A well site is seen in Texas. US oil production peaked at nearly 13 million barrels per day (bpd) in late 2019, but is now around 11 million bpd after coronavirus lockdowns crushed fuel demand and oil prices. — Reuters

NEW YORK: US shale producers are taking advantage of the oil market’s rally to levels not seen in nearly a year by locking in prices for future sales, sources familiar with the matter said.

US crude futures this month jumped above US$50 a barrel to the highest since February. The rally has sparked optimism among shale companies, but after a bracing year of pandemic-induced demand destruction, they are not ready to ramp up production. Instead, they are using futures markets to lock in higher sale prices.