The short-lived surge in oil prices that followed the start of Israel's air strikes against Iran two weeks ago resulted in a flurry of hedging activity by US producers seeking to lock in higher prices, according to AEGIS Hedging.
The Texas-based firm's platform set records in terms of volume, the number of trades and unique entities on 13 June, when WTI futures jumped 7pc following Israel's surprise attack on Iran, which prompted retaliatory strikes and fears of a full-blown conflict.
"By any metric you want to look at, it was the busiest day on our platform," said Ryan Alexander, vice president for trading.
Moreover, the number of trades was 70pc higher than in early January when the oil market was also in rally mode.
"A lot of producers were taking advantage of the rally," said Alexander. "Not all of that trading was associated with oil, but I would say the vast majority of it was."
Activity was focused on crude contracts for the second half of the year and 2026, reflecting the "prime hedging window" for most producers looking anywhere from 12-24 months out.
"A lot of focus was at the front end of the oil curve, which obviously saw the most price appreciation," Alexander said. "Swaps were still the favored structure, which is pretty typical for the producer community."
The week after the initial attack, speculative futures and options traders boosted their long positions of Nymex light sweet crude to a four-month high.
Hedging activity has since slowed down, which is only to be expected given companies have hedged their required volumes and the rally subsided since major energy infrastructure was largely spared and a ceasefire appears to be holding.
AEGIS carries out hedging for about 350 producers, the majority of which are based in the US. Its client base represents an estimated 25-30pc of US oil and gas production.
