Speculators betting on oil rising well above $US100 a barrel

Oil investors are buying contracts that will only pay out if crude rises well above $US100 a barrel over the next four years - a clear sign some believe today's bust is sowing the seeds of the next boom.

The options deals, which brokers said bear the hallmarks of trades made by hedge funds, appear to be based on the belief that current low prices will generate a supply crunch as oil companies cut billions of dollars in spending on developing fields. The International Energy Agency forecasts that non-OPEC supply will suffer its biggest decline in more than two decades this year.

"The market faces a supply crunch in the next 24 months," said Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York. "Some hedge funds are betting that oil prices will need to rise sharply to bring demand down again - that's why they are buying deep out-of-the-money call options."

Read the story in the Melbourne Age – “How far can oil rally? Options investors bet on surge above $US100.”

(Fossil fuels, among them oil, are at the root the cause of climate change, and yet people all around the world continue to earn money, lots of money, from them.

We know these fuels are the essence of what troubles the world and so it is time we illustrated sufficient courage to rejig the world’s economic system to remove profit making from the industry – radical, yes; needed, yes; urgent, yes; and, failing move to remove the mercenary intent, or at least make profit-taking an unattractive proposition simply means we are willing to risk the wellbeing of all our fellows to allow just a few of the rich elite, far less than one per cent of the world’s population, to become even richer – Robert  McLean).