It's one of 2014's defining stories: The price of oil trending down, down, down, dropping from more than $100 a barrel in June to close to $50 in December.
Do oil companies think the trend will be reversed anytime soon?
Not likely.
As Reuters reported Monday morning, many major oil companies are significantly hedged against falling oil prices, essentially betting that prices will stay low — and those hedges are shielding American companies from the potentially disastrous implications of oil's 50 percent drop.
Workers connect drill bits and drill collars used to extract natural petroleum on Endeavor Energy Resources LP's Big Dog Drilling Rig 22 in the Permian basin outside of Midland, Texas, Dec. 12, 2014. (Bloomberg via Getty Images)
The fact that American companies aren't fully exposed to low prices is likely worrisome for many OPEC members and Russia, countries that are dependent on oil revenues and have been hurt by the price plummet.
"OPEC should not expect to see any impact on U.S. shale growth in the first half of the year and the impact in the second half is being attenuated significantly by producer hedging," Ed Morse, global head of commodities research at hedging heavyweight Citigroup, told Reuters.
Exactly who is hedging and how is unclear — new hedging strategies will probably be disclosed in quarterly earnings reports in late January — but as Societe Generale energy derivatives manager Craig Breslau told Reuters, "It's a hot topic of discussion that everyone is thinking about and looking at."
A few big hedgers: EOG Resources Inc, Anadarko Petroleum Corp, Devon Energy Corp and Noble Energy Inc, all of whose latest filings revealed that they had hedged chunks of 2015 production at prices of $90 a barrel or more, Reuters reported.
Other indicators point to strong hedging activity.
Oil producers' and other non-financial companies' net short position in U.S. crude oil futures and options markets ballooned from 15 million barrels in August to more than 77 million barrels last week, and while companies that hedged back in the days of $100-per-barrel prices can reap big profits now, many of those firms are pouring the cash straight back into protective hedges, buying swaps and options pegged close to current prices.
With those deals, they're betting oil prices don't rise anytime soon.
Oil continued its long slide Monday morning, reaching a new five-year low.
Image via Investing.com/Business Insider
As American companies deploy hedges as shields, how the waiting game between the U.S., Russia, Saudi Arabia and the rest of the oil-producing world remains to be seen.
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Follow Zach Noble (@thezachnoble) on Twitter
