Oil Traders Increase Bets for $80 Crude on Supply Concerns

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 the buyer to purchase crude oil for December delivery at $80 a barrel, compared with an average of 77 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.

“The perception is that the risk of higher prices now is higher than at the beginning of this year,” Deutsche Bank’s Sieminski said in an interview. “The market is so tightly balanced that issues like a nuclear confrontation with Iran could add a great deal of worry” about supplies.
Bloomberg