NEW YORK: One fund is taking on a cheap long-shot bet that Brent crude will climb toward US$100 a barrel amid revived tensions in the Middle East, even as industrywide pessimism sees banks across Wall Street revising price forecasts lower.
Options equivalent to 20 million barrels that would profit if Brent’s June contract rallies toward US$100 traded on Monday, according to data compiled by Bloomberg.
They’re relatively cheap at about a nickel each, bringing the total bet to about US$1mil – a long-shot bet with futures near US$71 a barrel and widely expected to fall.
Implied volatility for June 5-delta calls jumped about seven points. It’s not the only bullish bet being placed.
The wager sticks out amid a flurry of bearish put options as trade wars roil the outlook for energy demand and turn Wall Street sour on crude.
Top traders including Vitol and Gunvor see prices falling further, while banks including Goldman Sachs Group Inc, Citigroup Inc and Morgan Stanley, among others, have slashed their forecasts in recent weeks. — Bloomberg
