I guess. It’s not like you take the oil off the market. Anything is worth exactly what someone will buy it for. If company “A” is willing to sell their oil at a loss maybe company “B” says no thanks. So six mo’s later then oil is up 20 bucks company “B” says O.K.
I realize that it is more complicated than that. Isn’t most oil sold as futures anyway? What’s up with the companies, say Southwest airlines, that bought gas at $3.oo gallon a year ago? They’re pretty much stuck aren’t they?
You are right that paying for hedges against a rising price market hurts you in a falling price market.
The financial side of the oil market is far more complicated than the actual exploration, production, transportation, refining, etc of the oil industry. At least from my point of view.
The financial side has far too many variables than can make a large impact in a short time, as we have seen the last 6 months.
This article makes a decent discussion of what you suggest.
The challenge is the confidence of when a higher prices will return, versus the cost of storage for that duration.
If prices continue to fall longer than the company can hold out (spending money for production without receiving revenue for sales, while spending more for storage) they are even worse off.