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The
monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil edged
up by $0.46 in September, to $45.18 per barrel. The increase coincided with a slightly
stronger U.S. dollar, the lagged impacts of a 44,000 barrel-per-day (BPD) decrease
in the amount of oil supplied/demanded in July (to 19.7 million BPD), and a continued
drawdown in accumulated oil stocks.
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Shale
companies are moving to secure hedges for their 2017 oil production, protecting
themselves from any renewed downturn in oil prices and guaranteeing them a
certain price for their output. The 6% jump in oil prices after the late-September
OPEC
deal provided a lifeline to shale companies, and they are reportedly
hedging their output "in
droves." The spike in hedges suggests that a substantial slice of the
shale industry will keep production steady or even increase oil flows,
potentially prolonging the price slump.
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The foregoing comments represent the
general economic views and analysis of Delphi Advisors, and are provided solely
for the purpose of information, instruction and discourse. They do not
constitute a solicitation or recommendation regarding any investment.
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