Traders believe in oil at $100 in the coming months

Investors have begun betting on oil rising to $100 per barrel in the coming months, RBC writes , citing data on options for oil futures on the New York (NYMEX) and European (ICE) exchanges. Now Brent oil is trading at around $85 per barrel - good news for the ruble in the absence of new US sanctions.

Details

• In addition to traders, betting on the growth in the cost of Brent and WTI futures to a maximum in 11 weeks increased hedge funds - the number of net long positions of speculative investors in Brent increased by 6.1% over the previous week, reaching a maximum since the end of May (496 thousand contracts).
• As Bloomberg wrote , on September 24, the volume of daily trading in Brent options reached an all-time high - 274,000 contracts changed hands, some of which were call options with strike prices of $100 or more (holders of these contracts will profit if oil quotes exceed the exercise value of the options).
• Among options with expiration before December 2018, the share of contracts with a price above $100 is 11%, but among January options it is already 79%. In general, among call options on Brent with expiration in December 2018-March 2019, rates are in the range of $74.5-130 per barrel.
• Traders are less willing to play on the possible growth of the American WTI: the share of bets on oil higher than $100 among call options on WTI futures with execution before December-March is 0.4-9%. The bet range is $60–135.

Context

• Traders and experts started talking about the rise in oil prices to $100 against the backdrop of its highs since 2014 after the recent decision of OPEC + not to increase oil production amid the expectation of new US sanctions against one of the oil exporters - Iran.
• This is good news for the ruble - after the end of the year, purchases of foreign currency by the Central Bank under the budget rule, the correlation of the exchange rate with rising oil prices will increase, noted Deutsche Bank (it decreased due to US sanctions).
• “Refusing to buy currency [of the Central Bank] reunites the ruble with oil, which is near the highs. In the absence of foreign exchange purchases and with oil at such peaks, the ruble may rise in price more than other currencies of developing countries, ”Elina Rybakova, a researcher at the Bruegel Research Center in Brussels, quotes Bloomberg.
• Thus, in the absence of new US sanctions until at least November (the main threat to the Russian currency), by the end of the year, the dollar may fall in price to 55–65 rubles, experts interviewed by The Bell said.

Artem Gubenko