Oil at US$100? Some hedge funds are betting on it

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Oil investors are buying contracts that will only pay out if crude rises well above US$100 a barrel over the next four years — a clear sign some believe today’s bust is sowing the seeds of the next boom.

The options deals, which brokers said bear the hallmarks of trades made by hedge funds, appear to be based on the belief that current low prices will generate a supply crunch as oil companies cut billions of dollars in spending on developing fields. The International Energy Agency forecasts that non-OPEC supply will suffer its biggest decline in more than two decades this year.

Continue reading at Financial Post

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