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Record price for oil brings in speculators
Reno News.Net
Monday 12th May, 2008
Oil jumped to a record above US$126 a barrel at the weekend, extending gains to more than 11 per cent since the start of the month on fuel supply concerns and a rush of speculator buying.
Waves of buying materialised on Friday, particularly from speculative interests.
Investors have seized on disruptions to crude oil supplies in the North Sea and Nigeria, as well as galloping demand for distillate fuels, a category that includes diesel fuel and heating oil.
Strong demand for diesel fuel in Europe, along with the growing use of distillates for generators to supplement strained power grids in fast growing emerging markets, have cut into stocks of distillate fuel and pushed up prices sharply.
An OPEC source has said the group might consider boosting output before its next scheduled meeting in September should crude oil prices keep rising.
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Comments on this story
xdockman
05-12-08, 07:50 AM |
Record price for oil brings in speculators
Is it true that we get most of our oil from Canada? There are so many crooks in the oil business people don’t know what to believe.
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waltky
06-29-08, 12:29 AM |
$7/gal. gas?
:eek:
Options traders bet oil could jump another 40 pct
Fri Jun 27, 2008 - Oil options have spiked to prices that imply crude could rise another 40 percent as recent big moves in the crude contract prompt heavy buying of protection against further price increases.
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Implied volatility, the theoretical amount traders expect oil to move based on the price they pay for an option, has surpassed 40 percent on many key contracts, according to calculations made from Reuters data. “There’s a great deal of uncertainty where prices are going," said John Kilduff, senior vice president at MF Global in New York.
“It shows how dear supplies are seen by a lot of people and just how powerful this bull market is and it could push more people into the bull camp when they see the prices people are paying for these options." The December $150 a barrel call option hit $11 a barrel by midday on Friday, up nearly eightfold from $1.45 a barrel on May 1.
A $150 call option gives the buyer the right but not the obligation to buy the underlying futures contract at $150 a barrel. A trader who intended to exercise a $150 call after paying a $11 premium would not make a profit unless oil futures surpassed $161 by December. Oil prices have jumped more than 45 percent this year to top $142 a barrel on Friday on tight global supplies, shattering records and hammering automakers, airlines and cash strapped consumers.
More [url:
http://www.reuters.com/article/reutersEdge/idUSN2742649220080627[/url]
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