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Despite the fact that American shale oil producers have ramped up their hedging activity over the past three months, amid falling oil prices triggered by economic uncertainty and tariff policy by the Trump administration, by recent historic standards, hedging remains low.
According to a Standard Chartered survey of 40 independent U.S. oil and gas companies, liquids production in the first quarter clocked in at 7.359 million barrels per day (mb/d), good for a 3.8% Q/Q decline. The hedge ratio for the current year stood at just 25.7% by the end of April, representing a small 4.7ppt increase since StanChart’s previous survey a few months ago. The current year’s hedge ratio is higher than levels recorded in 2023 and 2024, but well below
previous years. To wit, the hedge ratio was above 60% in 2018 and 2020. Similarly, the hedge ratio for 2026 is 6.1%, implying that the U.S. Shale Patch remains bullish about the oil price trajectory.
Indeed, the average 2025 price swap is a WTI price of $70.70 per barrel (bbl), significantly higher than current WTI price of $63.44/bbl, while the average 2026 price swap is $67.48/bbl. The average two-way collar floor for 2025 is $62.21/bbl, $1.99/bbl lower than StanChart’s previous survey, with the average 2025 ceiling at $76.65/bbl.
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In contrast, StanChart has reported that the hedge ratios for natural gas are significantly higher, standing at 42.2% for 2025 and 26.0% for 2026. However, StanChart says new hedging did not fully offset the hedges that rolled off the books, with the total oil hedge book contract declining by 0.8%.
Meanwhile, oil prices have rallied strongly over the past week, with Brent crude gaining more than $5/bbl and breaking above a series of key Fibonacci retracement levels as well as the 20-day moving average. According to the commodity analysts, the 14-day Relative Strength Index(RSI) stood at 51.0 at settlement on 12 May, a neutral reading that points to short-term normalization and unwinding from the extreme bearishness of recent weeks.
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However, StanChart says the rally primarily reflects market positioning as well as macro news flow, rather being an adjustment to a new stable price range. StanChart notes that money-managers have been less bearish lately, with StanChart’s proprietary crude oil money-manager positioning index sinking to -67.9 in April, well short of the -100.0 maximum bearishness last reached in September 2024.