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Financial Market: Producers Go Naked at Higher Oil Price

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When crude oil prices fall below $70, producers rush to get cover and hedge production forward to protect their cash flow. With prices over $70, and especially over $100, producers want to be more exposed to the oil price in the spot market — or, as they say in the trade, they prefer to go naked. The tipping points are more or less the same for both Brent and West Texas Intermediate (WTI).

Topics:
Oil Futures and Derivatives, Crude Oil, Oil Spot Markets, Oil Forecasts, Oil Prices
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