Oil prices fall as markets await the Israeli response

2024-04-17 02:50:52

A bet on the rise of American crude

While major price movements are quiet, warnings are already emerging from the options market; Investors are trading call options contracts weighted to the rise in prices at a premium that is the largest since last October compared to put options contracts, the month that witnessed the outbreak of the war between Israel and Hamas. Call options trading volumes have also increased significantly. Traders have piled up the equivalent of call options contracts on more than 3 million barrels of oil, betting that the price of US oil will rise to $250 a barrel by June.

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“Our basic expectation is that tensions will remain under control, avoiding a broader conflict that disrupts oil supplies,” said Han Zhongliang, investment strategist at Standard Chartered Bank. Han added that Iran’s apparent restraint, with its statement that the matter is over, as well as diplomatic efforts between Israel and its allies, may mean that “any such geopolitical risk premium is likely to be small.”

Inventories were also of interest after the American Petroleum Institute reported a rise of more than 4 million barrels in U.S. oil inventories nationwide last week, despite lower gasoline levels, according to people familiar with the numbers. Official data is scheduled to be released later today.

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