Hedging is a popular trading strategy frequently used by oil and gas producers, airlines , and other heavy consumers of energy commodities to protect themselves against market fluctuations. During times of falling crude prices, oil producers normally use a short hedge to lock in oil prices if they believe prices are likely to go even lower in the future. However, hedging is far from being a silver bullet that is guaranteed to protect oil producers from volatile markets, something U.S. shale producers understand only too well. Indeed, many are now unwilling to use this insurance after being slapped with hefty premiums thanks to hedging strategies that recently went awry. Unfortunately, this also leaves them fully exposed to the risk of ultra-low prices in the future. Market Uncertainty Bloomberg has reported that only 50% of shale producers have hedged 2021 production compared to 60% that had done so at a […]