For the last few months a simple trade in futures or options would have made you money. Buy puts on crude oil ETF’s as soon as crude oil crossed US$99 a barrel and sell them when crude oil fell beneath 92. Ride the opposite trade by buying calls as soon as you sold your puts.
Tonight the question is that will the same trade make you money or wipe you out completely as oil broke 88 dollars a barrel briefly and fell by more than 4% in a single day by early afternoon trading in NYMEX, New York.
Other than the US economic numbers, the central bank of Japan’s efforts to weaken the yen and strengthen the dollar, the worst possible news for oil over the next few days could only be the end of Colonel Qadafhi’ regime in Libya. While oil has been suffering a downward trend for the last 5 session, today and Friday’s futures trading would be dominated by the monthly rollover of Crude Oil ETFs on NYMEX.
As we walk through August, the primary bet will be if Oil will bounce back above 95 within the next 15 days or slide further towards breaching the 80 dollars a barrel benchmark.