The return of $ 100 oil has become the biggest bet in the oil options market.

The return of $ 100 oil has become the biggest bet in the oil options market.

The price of the options for future purchase in December 2011 at $ 100 per barrel jumped 14 percent on 24 November, the biggest daily gain in three months. called open interest for the contract has risen 51 percent this year to 45,424 lots, the highest for any choice of crude on the New York Mercantile Exchange.

The increase in options trading of $ 100 oil shows some investors anticipate will increase by at least 19 percent to the levels reached in 2008. While crude oil is up 6.3 percent this year, the economy recovers, Morgan Stanley, said prices of November 1 to $ 100 next year to replace reduces production capacity. At the same time, BNP Paribas SA said on November 18 price increases "will be difficult", as the Fed tries to revive the U.S. economy through a long program to encourage and Europe struggles to contain the crisis of sovereign debt.

"The push and pull in oil prices continues as market concerns short-term debt hide improved oil market fundamentals," said Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co. in New York in November 1926 report.

Options contracts that allow investors the right to buy futures in December 2011 at $ 100 a barrel rose to $ 5.55 on 24 November, from 4.87 dollars the previous day, the biggest increase since August 27  . Have an average of $ 6.38 this year and ended last week at $ 5.46.

Not so fast

When asked today about the rise of oil at $ 100, Deutsche Bank AG chief energy economist Adam Sieminski said in Washington that "oil could reach as high, but I really do not think it will come in the next six months."

"Oil will remain stronger than just the basics of improving, things start to look good in 2012, 2013, 2014," Sieminski said in an interview ओं Television Deirdre Bolton in "Inside Track."

Oil futures broke two weeks of declines on the Nymex last week, rising 2.8 percent. The contract for January compared to months rose 0.4 percent today to $ 84.11 a barrel at 10:18 am in New York. December 2011 futures traded at $ 87.13.

"Definitely there are downside risks, but you still have other risks are higher," said Jeff Currie, head of London's commodities research at Goldman Sachs Group Inc., which last year correctly predicted that oil would reach U.S. $ 85 in late 2009 and is now trading at $ 100 in 12 months. "U.S. economic data have surprised to the upside. This shifts the focal point back to the U.S."

Ireland Rescue

While oil has climbed this year, has lagged behind the increase of 59 percent in GSCI Standard & Poor's of 24 commodities. An increase of $ 100 also track the record $ 147.27 a barrel reached on July 11, 2008.

Oil futures have fallen 4.2 percent since Nov. 11, after China said it would raise bank reserve requirements to curb lending and Ireland led to talks on a rescue plan led by the European Union .

The crude had risen by 6.6 percent in the five days ending on 05 November, the week the Fed announced it would buy an extra $ 600 billion of bonds in a second round of so-called quantitative easing.

"Sugar Rush"

With the "sugar rush" quantitative easing further, "another price advantage will be difficult," said Harry Tchilinguirian, BNP Paribas chief market strategist for commodities in London in a note dated 18 November.

Hedge funds betting on oil cut the week before, the reduction of so-called net long positions by 15 percent, the most in almost three months, according to weekly commitments from the Commodity Futures Trading Commission Merchants report 19 November. Bets on gains in crude prices rose to the highest level in at least four years in the week before the Fed announcement.

Americans increased spending for the fifth month in October with home purchases increased 0.4 percent, the Commerce Department said Nov. 24. The number of people filing unemployment claims fell to 407,000, the lowest level in more than two years in the week ended November 20, the Labor Department reported the same day.

Even if the U.S. recovery teeters, investors are betting on China to keep oil prices. The consumer of the fastest growing oil consuming 9.6 million barrels per day in 2011, second only to 19.1 million barrels a day to be used in the U.S., according to the seat in Paris, International Energy Agency. oil demand of China will increase by 4.2 percent next year while the U.S. be reduced by 0.2 percent, the IEA said.

World Record Demand

"Global demand for oil is expected to reach a new record in 2011," said Francisco Blanch, head of New York commodities at Bank of America Merrill Lynch. "The underlying economic outlook remains positive. We're still looking for the economic growth due to quantitative easing and accelerating growth in emerging markets."

Most members of the Organization of Petroleum Exporting Countries, which supplies 40 percent of world oil, have said they are comfortable with prices between $ 70 and $ 90 a barrel. Libya opinions $ 100 as acceptable. OPEC Secretary General Abdalla El-Badri, said prices of $ 100 does not necessarily damage the overall recovery of the system or to increase production if not accompanied by a supply disruption.

"If there is a physical shortage, I think OPEC will act," said El-Badri said in an interview on 24 November in London. OPEC will meet next in the Ecuadorian capital of Quito, on 11 December.

senior analysts from the IEA, founded by consumer countries in 1974 in response to the Arab oil embargo, we also expect oil prices to grind higher over time.

"In the markets in terms of oil, I think the era of cheap oil is over," said IEA chief economist Fatih Birol of a conference in Budapest on 26 November. "There may be zigzags in the future according to the economy, this and that, but the general trend is that we will see higher oil prices."