Oil markets remained pensive on Friday ahead of Opec's sideline meeting in Cairo. As expected, the cartel did not announce further production cuts, however the markets may be stirred during Asian trading Monday morning as a result of Saudi Arabia's price targeting. In a rare step outside of typical form, Saudi Oil Minister Ali al-Naimi targetted $75 as a fair and reasonable price level. In late-day trading in NY, bargain hunters bid up the June 2009 $75 calls.
Similar consumer strategies have been targeted in WTI for mid to late 2009 when global crude demand may begin to return. Using Asian options, the July through December 2009 (2H09) $80/100 call spread strip is offered at about $2.70 ($2,700 of total premium at risk per month with a maximum payout of $17,300 per month). The call spread strip can be purchased for Zero Cost by selling the $48 put in the same tenor. With the 2H09 swap strip trading above $64.00, downside risk on this Zero-Cost 3-Way does not begin for more than $16.00.
Singapore, 16:00
Sunday, November 30, 2008
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