Wednesday, July 06, 2005

OOOIIIIILLLLLLLL!!!!

Bloomberg:

July 4 (Bloomberg) -- Record oil prices may increase to $80 a barrel this year, options contracts on the New York Mercantile Exchange show. Investors are speculating OPEC won't produce enough oil to compensate for any disruption to supplies.

New York Mercantile Exchange data show 6,900 options contracts outstanding that allow buyers to purchase oil for December delivery at $80 a barrel, compared with an average of 77 contracts in January. The probability that oil will top $75 a barrel when the December crude contract expires is 21 percent, according to Adam Sieminski and Michael Lewis, strategists at Deutsche Bank AG, up from 5 percent at the start of the year.


I think this would be better stated as "participants in the market believe there's a 21 percent chance oil will top $75 a barrel when the December crude contract expires." "prices reflect market expectations that there's a 21% chance oil will top $75 a barrel when the December crude contract expires." But, nonetheless, there's a significant bet on the table that oil's going to go up quite a bit in the next 6 months or so.