‘’Too Huge To Hedge’’ Goldman Explains The Rationale Behind The OPEC Deal

The important thing for OPEC in balancing the oil market is to flip the futures curve. Goldman Sachs warned that till the oil futures market strikes decidedly right into a state of backwardation, OPEC might wrestle to considerably drain inventories. Because it stands, the market contango – a state of affairs during which near-term oil futures commerce at a reduction to deliveries six or twelve months out – permit shale drillers to hedge their future manufacturing and lock in larger costs for supply at a later date. That gives shale corporations with the knowledge of…

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