Investors bet on oil at $300 this year

By Javier Blas

Published: July 2 2008 03:00 | Last updated: July 2 2008 03:00

Investors are betting that the oil price could surge to $300 a barrel by the end of the year, according to data provided by the New York Mercantile Exchange, the world’s largest energy market.

Nymex statistics show that investors for the first time placed a small bet this week that West Texas Intermediate oil futures would hit $300 a barrel – more than double yesterday’s price of about $142.50 a barrel – by December.

Previously the highest bet was $275 a barrel and $200 remains the highest bet with significant investor interest.

At a cost of 18 cents each, investors bought 1,402 call options – contracts that give holders the right to buy crude oil at a predetermined price and date – that would be profitable only if oil prices trade above $300 a barrel in December.

Traders said that call options with prices well above current market quotes resembled “lottery tickets” although some noted that call options at $150 a barrel had also looked highly unlikely last year yet they are now almost profitable.

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Investors bet on oil at $300 this year