Crude finds new lows, consumer hedgers alert

Options markets increased implied volatility today as ranges remain wide for the September WTI option expiration.   Talk of open interest at the $110 level may have helped drive the market toward that strike.  

There seems to be enough sellers of out-of-the-money calls for the balance of the year, favouring a short call strategy to long put strategy.  This may be due to the optically large premium one can collect.  Traders also envisage a stall here in the market in the 100-110 range.  This would potentially decrease volatility sharply, making options less valuable.  

That said, we cannot stress enough the upside risk in the near term.   Weather risk is still a factor for September.   The conflicts in Georgia could have a serious affect also on supply.   For consumer hedgers looking to hedge 2009, this may be a better time than September or October to buy some level of call protection.  The Cal 9 (Asian) 120-150 call spread is offered at @7.60/bbl.  

Fri. 230pm NY