Oil producers haven't been this cautious on oil prices since 2007

US oil producers haven’t been this cautious on the market in nine years.

Short positions — bets that prices will fall — in US crude oil futures contracts that are held by producers and merchants rose to the highest level since 2007 in October, according to the Commodity Futures Trading Commission (CFTC).

The contracts totaled 540,000 as of October 11, said the Energy Information Administration.

When oil producers are worried of an oil-price drop, they can use futures to protect against losses they may suffer.

This works by selling a futures contract, which would require the producer to sell the commodity at the agreed price. If the price of oil is lower than the agreed price at the time of the the contract’s expiry, the producer benefits from the difference.

US crude oil futures fell on Monday, down 1% to $50.34 per barrel, after Iraqi officials showed reluctance to comply with any limits on production that other members of the Organisation of Petroleum Exporting Countries agree to.

That’s just one of the risks to oil prices that producers are likely watching. Additionally, US oil inventories are near the highest level for this time of year, on average.

Since May, the count of active US oil rigs has advanced at a pace faster than anything seen since the price crash started in 2014. In part, the rising rig count reflected oilfield-service providers’ confidence in the rise in oil prices, and their ability to negotiate higher prices from their clients.

The Energy Information Administration said short positions of WTI futures have risen at a faster pace than Brent crude futures, the international benchmark, since the summer of 2015. This suggests that producers are able to drill profitably as long as oil stays in the $50 per barrel range, the EIA said.

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