Will We Soon See US Crude Oil Back At $100 A Barrel?
It is hard to fathom that the price of Oil was in tatters just over 1 year ago. Oil futures prices went negative for the first time (the cost of holding oil was greater than owning it) and the price of WTI (West Texas Intermediate) Crude Oil hit an all-time low of $6.50 on the 21st April 2020. Since then, the WTI Oil price has increased by over 1,000% to $76 a barrel. The current price level was last seen back in Oct 2018, meaning that the price of WTI is now higher than it was pre-COVID. As developed economies, led by the US, start to return to normal life the demand for oil is increasing and now Options Traders are betting that the price of oil will once again reach $100 a barrel. The last time the price of WTI was at $100 was back in 2014 when a supply of Crude hitting the markets swiftly push the price down to $45 a barrel.
Interestingly, $100 options are now the most widely owned WTI call contracts on the New York Mercantile Exchange, with the owners betting on a further 30% move from current prices by the end of next year (Dec 2022).
The popularity of $100 options is another example of traders converging on outlandish bets they consider to be easy ways of making money (Tesla plus the Meme stocks such as AMC and GME spring to mind). The world economy is still recovering from Covid-19 and major oil producers are lifting…