Futures Market Traders Bet On $200/Barrel Oil In 2008
Some news items deserve a polar response. Like this one, which might well be sub-titled "the green side of greed and market uncertainty."
Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.The guys in the oil futures pit (pictured) must know something we don't. After all, Peak Oil is either an urban legend or a liberal work-around to gain public support for upping CAFE standards. Right?And, the reason no new refineries have been built in the US for over 30 years is because EPA regulations make it too expensive. Or, so we have been told by the various Think Tank experts.
Maybe they won't need to build any more refineries, though. This is so confusing!
While analysts at Merrill Lynch & Co. and UBS AG say the slowing U.S. economy will lead to the biggest drop in prices since 2001, the options show some traders expect oil to rise for a seventh straight year.If these $200/barrel trades help drive up the price, the profits will come in handy for traders to buy Teslas or one of the early Plug-In hybrids, and drive the overall vehicle market to high-mileage models.
CAFE standards are the tail wagging the dog in that scenario. Got that one Detroit? Go tell it to the marketing department...unless you really do want us to buy cars made in India.
Via::Bloomberg.com, "Oil $200 Options Rise 10-Fold in Bet on Higher Crude" Image credit::Bloomberg, "Traders work in the crude oil options pit on the floor of the New York Mercantile Exchange in New York, on Jan. 7, 2008. Photographer: Robert Caplin/Bloomberg News"