Oil likely to hit over $80 by Christmas, says report
With oil prices trading near their highest level in two years owing to the tough Opec action leading to supply cuts, some traders are betting that the rate increase could have more room to run, said a report.
A total of 48,000 contracts have traded over the last few days that would profit most if brent spikes before Christmas, including several large individual trades reported Bloomberg.
They include 14,000 options giving traders the right to buy February Brent at $71 a barrel, as well as 22,000 for $85 and 12,000 for $80. They all expire on December 21, stated the report.
Oil prices have rallied in recent weeks as Opec (Organization of Petroleum Exporting Countries) supply cuts help to rebalance an oil market plagued by oversupply.
More recently, growing tensions between Saudi Arabia, Opec’s largest oil producer, and some of its neighbours helped prices break above $60 a barrel for the first time since 2015.
Against that backdrop, the crude options market has generally been looking brighter, said the Bloomberg report.
The so-called put skew, the difference in demand for bullish call options versus bearish put options, has also fallen in recent days, said the report.
That gauge closed at its least bearish level since late-August on Thursday, bolstering oil’s rosy outlook, it added.